House Bill 16-114, or the Loan Inequity Reform Act of 2008, was offered by Rep. Victor B. Hocog, Ind.-Rota, who has four properties foreclosed by CDA
CDA acting Executive Director Oscar Camacho, in an interview yesterday, said the bill “adversely impact” the agency.
“We simply oppose it,” he told Variety, declining to elaborate.
According to Hocog’s bill, many individuals and small businesses borrowed money from CDA, secured by their real property, at a time when real property values in the CNMI were high.
The economy, however, “has faltered, making it impossible for many borrowers to meet their loan payment to obligations to CDA.”
“These borrowers now find themselves in the position that if CDA forecloses on their property to satisfy their loan obligations, they will still owe deficiency judgments,” the bill stated. “This act is intended to relieve borrowers of CDA from facing deficiency judgments.”
CDA has foreclosed four properties of Hocog on Rota: the Sunset Villa hotel, two houses and a 25,000-square meter land.
Camacho said CDA will send a letter to the Legislature explaining why the agency’ opposes Hocog’s legislation.
CDA is also willing to testify against the bill in any legislative public hearing, he added.
According to the bill, “CDA lends to individuals and businesses that would not otherwise qualify for a loan from private banks because of their credit history, limited assets, or lack of experience in the business that they intend to fund with the loan proceeds. The same borrowers generally cannot refinance their CDA loans with private institutions for the same reasons they could not obtain loans from private institutions in the first place.”
The bill stated that subjecting CDA’s borrowers to deficiency judgments is inequitable because both the borrowers and the agency assumed, at the time when the loans were made, that if there were to be default on the loans, the foreclosure of the property would be sufficient to repay CDA.
Hocog believes that it is in the “best interest” of the commonwealth to relieve CDA borrowers from their obligations to pay deficiency judgments.
