27. December 2009 by admin.

Avia Collinder and Sabrina Gordon, Business Reporters

What appears locally to be mounting listings of properties up for auction are actually repeated advertisements done by some players to move inventory of foreclosed properties that creditors are finding increasingly difficult to offload.

Auctioneers state that on average, no more than five per cent of consigned properties are attracting buyers, and some banks are turning to other methods to dispose of confiscated assets to rebalance loan portfolios that are seeing a new slew of underperforming loans as pay cuts and job losses limit borrowers’ capacity to service their debt.

“Not much is coming to auction, and what comes in is not selling. It applies throughout the range,” said David McNulty, auctioneer and director of CD Alexander Realty Limited in Kingston.

“We have leftovers from last year and the year before. What we sold in the first quarter (of 2009) was what was awaiting the reduction in transfer tax. But, after the reduction, there were few sales. The numbers have been reduced significantly.”

At FirstCaribbean International Bank Jamaica Limited, however, Managing Director Clovis Metcalfe says at his bank, the mortgage default rate is below the industry average of 5.4 per cent, linking it to the strategy used to dispose of foreclosed properties.

“All our sales which are in single-digit total - less than five properties - have been by way of private treaty only,” Metcalfe told Sunday Business.

“Units in the mid-seven figures category are selling best at private treaty,” he added.

Dead assets

Gladstone Dacosta, financial controller at CD Alexander, says, “Less than five per cent of properties brought to auction were sold. It is totally different to 2008,” he added, referring to the experiences at his company.

Williams Tavares-Finson, managing director of Tavares DC and Finson Realty in Kingston, a top auction house, says building societies may well have assets on their hands which are dead because of the lack of investor interest in a sector where people tend to converge for bargains.

“These are dead assets and might be increasing the pool of liabilities that the building societies have,” he said.

“The market is flat. From my standpoint, it is especially so in the residential sector. Commercial properties are seeing some movement.”

He also told Sunday Business that just about five per cent of forced-sale properties are successfully auctioned off.

The building societies, or private mortgage-loan sector, at September 2009, had bad-debt portfolios amounting to $4 billion, a near doubling of non-performing loans of $2.6 billion at the comparative 2008 period, but a $400 million improvement relative to the June 2009 quarter, according to industry data from Bank of Jamaica.

Still, the central bank numbers also show that the rate of growth in non-performing loans - that is, debts not serviced for three or more months - is still increasing. Delinquencies in 2007 grew at 9.9 per cent, but a year later, it reached 45.3 per cent and the current data set shows the rate of growth climbing to 54.6 per cent.

The National Housing Trust (NHT), with a 16 per cent default rate on the number of mortgages, not the value, said at the top of December that the value of the arrears was $879 million.

Thirty-six houses were sold by public auction and 34 by private treaty between January and October 2009, the agency said.

The trust, in written response to Sunday Business queries,said it was not its policy to repossess property but that “when an NHT beneficiary defaults on his/her mortgage payments, the trust’s first response is to work with the beneficiary to find solutions for repayment”.

Mortgage payments are due on the first of the month. If a payment is not made after 15 days, then late fees are added. If the arrears are not cleared after 90 days and there has been no arrangement for payment, the NHT may begin legal action, usually via sale by public auction.

Still, bargain hunters who might expect to get sweet deals from auctions are bound to be disappointed.

The reserve price is often close if not identical to the market price of properties - residential or commercial.

“People come to auction expecting a fire sale, but this is not realistic,” said Arnold Breakenridge, company director of auctioneers and surveyors Breakenridge and Associates in Kingston.

“Prices are closer to market.”

The volume of properties going to auction, said Breakenridge, has increased over the last several months - covering real estate across the full market spectrum and impacting all price categories.

Uncertainty

Breakenridge also noted that some potential purchasers who qualify to bid are reluctant to go forward and complete the sales because of uncertainty about how the asset would perform in the current economic downturn.

“The tightening of the economy is showing in this smaller participation,” he said.

NHT, a publicly owned entity and the dominant player in the wider mortgage market, had not, up to press time, commented on the value of properties it had put on auction.

Jamaica National Building Society (JNBS), the largest of the private-mortgage retailers, was more forthcoming.

The building society said it put up 149 properties for public auction during the period January to November, but only one property was successfully disposed of using this means.

“Public auction is the first step after it has been determined that a property can be sold under the terms of the mortgage agreement,” said JNBS mortgage executive Wanica Purkiss.

“Very few properties are sold at public auction, however, and the next step is for the property to be offered for sale by private treaty.”

JNBS sold 26 of the 149 properties by this means. The intake from the 27 properties were:

15 properties - less than $6 million each

Nine properties - $6 million to $12 million each

Three properties - over $12 million.

“When a property is being sold by private treaty sale, the particulars of the property are listed on the JNBS website - to real-estate dealers, as well as the general public - and written bids are invited,” said Purkiss.

“The mortgagor can participate in both the public auction or private-treaty stage of the asset sale, and sometimes does.”

Increased job losses

Purkiss also tells Sunday Business that at the end of October 2009, JN’s delinquency ratio was under five per cent, which was within industry norms.

At October 2009, she said, the value of arrears on JN’s books amounted to $288.7 million.

But given the expectation for increased job losses and reduced income for mortgagors, especially for self-employed persons, along with the prevailing recessionary conditions in the United States and the United Kingdom, where a significant number of mortgagors reside, the projection is for the deterioration to continue, Purkiss said.

The NHT says options being offered to its delinquents include a payment plan to liquidate arrears; restructuring of mortgage loans for a specified period; extension of the loan term; temporary reduction in mortgage payments, which may allow interest-only payments for an agreed period; and a moratorium or suspension of mortgage payment for three to 24 months. Insurance fees must still be paid during the moratorium period. (Jamaica Gleaner)

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27. December 2009 by admin.

Sabrina Gordon, Business ReporterNew mortgages in Jamaica have been sent into decline by the current slowdown in the domestic and global economies, according to numbers coming out of mortgage institutions, and some lenders are bracing for even worse news next year.

With the imminent agreement between the International Monetary Fund (IMF) and the Government for a US$1.3 billion loan, an even tighter squeeze will be placed on the mortgage market in 2010, at least one major industry player believes.

Hugh Reid, senior vice-president and chief operating officer at Victoria Mutual Building Society (VMBS), told Sunday Business that the negative outlook is supported by the adverse implications the looming IMF deal is expected to have on public-sector employment.

“Given this, we expect to disburse an even smaller number of new mortgages in 2010 than in 2009. It is clear that we will see further economic tightening and a reduction in new mortgages, as well as worsening in arrears,” said Reid.

New accounts at VMBS up to October 2009 totalled $3.8 billion, which represents a 50 per cent reduction over the comparative period last year.

Reid has blamed the fall-off primarily on adverse economic conditions, which continue to affect consumers’ effective demand, as well as the company’s review and tightening up to stem bad loans.

Bank of Jamaica data also reflect a downward spiral in the total value of new mortgages this year to $2.2 billion at September, from $2.8 billion in June, and $3.7 billion at the end of March.

Building societies dominate the mortgage market, which at September was valued at $82 billion, according to the central bank.

Jamaica National Building Society (JNBS) remains market leader with VMBS occupying the number two spot.

For the period April to November 2009, Jamaica National disbursed a total of 1,222 loans, down from 1,441 for the comparable period in 2008.

For the corresponding period in 2007, 1,410 loans were made.

Several lending institutions are reporting that they have tightened qualifying requirements to forestall a worsening of their non-performing loan portfolios in the face of current economic conditions, while they say they have been working with existing customers to contain arrears.

“We continue to observe the highest loan-underwriting standards and our aim is to establish the mortgagor’s ability to repay the loan at the time the application is made,” said Wanica Purkiss, mortgage executive at JNBS.

The National Housing Trust (NHT) has embarked on a major publicity programme to have its clients discuss their situations with the institution.

“We are now working even more closely with our mortgagors through our mortgage-management prog-ramme to ensure that the arrears situation is contained,” said Sophia Lewis, communications coordinator at the NHT.

Foreseen the 2009 economic conditions

Pre-emptive action was also taken by VMBS, its chief operating officer said.

“From as far back as late last year we had foreseen that in 2009 economic conditions would be much more difficult, and we have sent letters to all mortgagors to come in if they are having difficulties,” said Reid.

“The earlier they come in the better able we are in deploying options available to assist them.”

The expansion in the suite of options, according to VMBS, has included a moratorium on interest and or principal payment, and an offer to recapitalise arrears.

Despite the proactive measures by institutions, delinquency is expected to spike next year.

“Given the expectation for increased job losses, reduced income for mortgagors and especially for self-employed persons, along with the continued recession in the United States of America and United Kingdom, the projection is for some deterioration to occur in our level of arrears,” JNBS’ Purkiss said this week.

At the end of October, JN’s arrears amounted to $288.7 million, resulting in a total of 149 properties being put up for public auction up to November. Its delinquency ratio was reported to be under five per cent.

For VMBS, at October this year, a little more than 600 mortgage loans valued at $265 million were past due over three months. This is a deterioration on the 400 accounts valued at $150 million that were in arrears up to October last year.

“At VMBS, we have seen a deterioration in our loan-quality ratio. It has worsened by at least one-third since the start of this year,” Reid said.

VMBS’ total mortgage portfolio is now worth approximately $30 billion, covering about 15,000 accounts, of which residential mortgages account for in excess of 90 per cent.

“We anticipate that 2010 will be worse than 2009 so will continue to deploy resources based on the economic conditions and make adjustments as necessary,” said Reid.

Statistics

FirstCaribbean International Bank, which, through its building society, controls just about 10 per cent of the residential mortgage-loan market by Bank of Jamaica statistics, reports that its incidence of default is below the industry average, which stood at 5.4 per cent at June 2009.

“I am unable to provide specific details, however, our delinquencies are now higher than normal,” FirstCaribbean’s managing director, Clovis Metcalfe, said. He expressed the view that an IMF deal would bring stability to the market.

The NHT has an on-book arrears portfolio of $879 million, with 70 properties having been under the hammer for sale by public auction and treaty between January and November this year. (Jamaica Gleaner)

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27. December 2009 by admin.

File
Claro Jamaica headquarters, Knutsford Boulevard, New Kingston. Claro Jamaica has beaten Digicel as the first big telecom to roll out an Internet package using netbooks as hooks for business, though the Irish company has been positioning for a launch for about four years.

Claro now has on offer Dell mini 10 netbooks in a package the company’s promotions say is worth $49,999.

But customers will be asked to pay only $6,000 at sign-up for the so-called ‘3,000 megabyte plan’, and will qualify for a free netbook once proof of income and address and proper identification are provided. Subscribers also must commit to a three-year contract to pay a monthly fee of $3,000, which would entitle them to 3,000 megabytes every 30 days.

Should the user exceed the allocation, he/she will be billed $3 for each megabyte downloaded.

The package is six months or more ahead of Digicel’s planned second-quarter roll-out, as the company sets up its new 4G network that it promises will be faster and more efficient than the 3G services being sold by Claro and LIME Jamaica.

Netbooks are the smaller versions of the regular laptops, and are considered a more transportable alternative. It is projected that some 140 million will be sold over the next five years, as the device grows in popularity.

Digicel’s plan was to begin the sale of the device between April and June 2010, the same time as the roll-out of its WiMAX service, which is expected to cover 60 per cent of the population in all 14 parishes at commissioning.

The netbooks, Digicel CEO Mark Linehan said in September, were being sourced from a number of computer manufacturers, including Acer, whose 10.1″ Aspire One P531h netbook is currently being sold on the US market for US$415.

Back in February, Dell Inc launched the mini netbook at US$399, and is now offering promotional financing at US$15 monthly for qualified applicants, or a one-off starting price of US$349 - the equivalent of J$31,000 - depending on where one shops.

Claro’s 3,000 prepaid plan comes with one month free Internet access.

Digicel declined comment for this story. (Jamaica Gleaner)

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27. December 2009 by admin.

Pickersgill Arthur Hall, Senior Staff Reporter

The Opposition People’s National Party (PNP) is not impressed with the tax adjustments announced by Prime Minister Bruce Golding on Wednesday. The party has not ruled out further protest action.

The PNP took to the streets last Wednesday with six demonstrations against the initial tax package and warned that more protest would come if major changes were not made.

On Wednesday, Golding said, having heard the cries of the people, the Government decided to scrap the idea to impose general consumption tax (GCT) on several basic food items, while introducing measures to tax luxury items, such as jewellery, television sets exceeding 32 inches, and jet skis.

But PNP Chairman Robert Pickersgill told The Sunday Gleaner that the changes would not determine the next step of the Opposition.

“We rule out nothing. We will continue to analyse the prime minister’s announcement and decide on our next course,” Pickersgill said.

“There was a suggestion on the table for a vigil on New Year’s Eve and that has not been taken off the table,” added Pickersgill.

He said the Opposition would announce its course of action this week after its technical team completed its assessment of the changes announced by Golding.

Economic framework

That echoed an initial response from PNP president Portia Simpson Miller, who said Golding had not gone far enough to establish equity in tax administration.

“Notwithstanding the reversal of the obviously ill-conceived elements of last week’s tax package, this new announcement still has not provided an economic framework within which the decisions were made,” Simpson Miller said

She argued that the prime minister did not provide the targets, standard data or parameters that should accompany a tax package.

“The vague references made by Mr Golding to requirements of an IMF agreement do not satisfy the country’s right to know the details of the agreement. This is the fourth tax package in eight months that has been presented in a vacuum and without consultation,” Simpson Miller added.

She charged that Golding’s presentation did not address the reduction in purchasing power that the measures would bring to the working and middle classes, which are still being forced to pay the major part of the taxation package.

“The Opposition still does not accept the reasoning behind the Government’s rejection of the increase in tax on interest. In addition, no element of the productive sector was provided with any incentive for growth and expansion, a critical prerequisite to empower the productive sector.”

The opposition leader continued to question “the appropriateness, legitimacy and procedure in effecting revenue matters through national broadcasts and/or press releases”.

Simpson Miller was supported by the PNP’s Women’s Movement, which accused the Government of continuing “to take the Jamaican people for fools”.

Jennifer Edwards, president of the women’s movement, said the announcement by the prime minister was nothing but feel-good measures, designed to make the population believe that he had “heard their cries”.

According to Edwards, “While removing some items from the December 17 list, the Government will still extract over $15 billion in taxes from the pockets of the poor, low- and middle-income earners by way of the increased GCT, tax on petroleum, SCT tax, and tax on electricity for residential customers.”

Higher prices

Edwards expressed concern that the taxes which remain, and some of those introduced, would result in higher prices to the consumers, as production and transportation costs increased.

In the meantime, the PNP Youth Organisation (PNPYO) said while it was pleased that the prime minister took on, in full or in part, three of its tax proposals, it was still not satisfied with the package.

Damion Crawford, president of the PNPYO, pointed to its proposals to increase the cost of motor-vehicle licensing, increasing the taxes on luxury items, such as televisions and washing machines, and increased efforts to capture GCT cheats, as some adopted by the Government.

“We believe that the planned approach proposed by the prime minister to catch GCT cheats through an advanced-payment scheme is very creative and should be applauded,” Crawford said.

However, the PNPYO did not accept that the changes announced by Golding made the tax measures sufficiently equitable.

“Indeed, we are still very much against the increase in GCT rates, the GCT on electricity, and the increase in the gas tax, as these will only be cause for a sustained increase in prices,” said Crawford. (Jamaica Gleaner)

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27. December 2009 by admin.

Prime Minister David Thompson (FP)

from PRIME MINISTER DAVID THOMPSON

FELLOW BARBADIANS at home and abroad, residents, visitors and friends of Barbados, “Season’s Greetings” to each and every one of you.

Once again the Christmas spirit has been released and the build-up to celebrating the most important event in the Christian calendar is reaching a climax. By now many of us would have completed the last assignment at work, carried out the big clean-up at home, purchased special gifts for our loved ones and bought the raw materials for the great Christmas feast.

Some of us may postpone these activities until the last moment in order to get the adrenalin flowing from racing against time to complete everything by midnight on Christmas Eve. Whatever your management style for approaching Christmas and the New Year, I hope that you get the enjoyment and the sense of fulfilment that you so rightly deserve.

However, in the midst of these pre-occupations, don’t forget the primary purpose of Christmas. For most of us, Christmas is a celebration of the birth of Christ, and the realisation of the promise of a Saviour who would conquer death and give mankind access to everlasting life.

At another level, it is a time for families to get together and to honour their members, especially the children and the elderly. It is a time when the function of the family as a loving, nurturing and protecting institution should be clearly demonstrated.

Christmas should also be a time to take stock, to banish gloom and doom, and to spread the joy. Throughout the history of Christianity, people have used this season as the occasion to call a truce and to reach out to each other, to share good news and to seek peace.

Let us therefore draw on the Christmas spirit and do the same. During this period let us reflect on what is taking place in our environment and try to understand and adjust to the fundamental changes that are transforming the world around us.

In particular, let us look critically at the current economic recession and ask ourselves what we can do to mitigate the negative effects of a contracting economy. Let us not underestimate the corrosive effect that a fall in income could have on our behaviour and our social institutions.

Let us therefore do all that is necessary to stabilise the situation and to plan for recovery. Never forget that we are a resilient people. Throughout our history, when others saw threats, we have seen opportunities; and what others took for weaknesses we have seen as strengths.

So let us use this festive and peaceful season to come together as a family, to share the joy and to commit ourselves to working together. Let us promise to collaborate, to strive to create wealth, employment and social justice, and overcome whatever challenges that may come our way.

Let us also reach out to those in need and share the festivities. Let us not forget those who will spend Christmas in institutions, those who will spend Christmas at home alone or as strangers in our midst.

On behalf of the Government and people of Barbados, and on behalf of Mara and our girls, we wish you all a happy and enjoyable Christmas.

I assure you that throughout this break we shall continue to reflect on how we can make 2010 a prosperous and successful year for all.

Thank you and God bless Barbados. (Nation News)

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27. December 2009 by admin.

Contractor Al Barrack saying Minister of Housing and Lands Michael Lashley needs to apologise to the judicial system and then be “muzzled and put on a leash” by the Prime Minister. (Picture by Nigel Browne)

by BARRY ALLEYNE

NO MORE talk!

That’s what contractor Al Barrack promised yesterday.

He wants his money from the Government of Barbados.

He wants it now, and he wants all $63 million in a single payment.

Vowing in an exclusive interview he said would be the last time he spoke publicly on the matter, Barrack also begged for Prime Minister David Thompson to place a muzzle on Minister of Housing and Lands, Michael Lashley.

Last week, Lashley said Barrack’s court award of $63 million for the Government’s office was frivolous and vexatious.

“I find that very hard to believe. I don’t want to get into a war of words with anyone, but it is what the minister is saying that is frivolous and vexatious,” he told the SATURDAY SUN.

According to Barrack, what was even more frivolous and vexatious was the fact that Goverment would make an issue of someone owing them almost a million dollars, yet they owed that person $63 million.

“If they think that that money is a problem, then let them take it out of the money they owe me. I would have to laugh at that being a problem since they owe me way more money than I owe them,” he said.

“The court has spoken. I have to be paid my money. I want to get it shortly, and I don’t want any [instalment] payment. I want all $63 million one time. It’s that simple.”

The contractor said friends had asked him why he was talking as if he had something against Government, but that was not the point.

“I am not doing this to start a war of words, but the public of Barbados has to realise what is going on. They are the taxpayers and are the ones who will have to foot this bill,” Barrack said.

He noted that Barbadians continue to see how poor black Barbadians can be treated, yet international companies which work with Governments are paid on time, and without much fuss. “Every Barbadian can see what could happen if they take the chances I took, and what could be the end result,” he added.

Barrack, who ironically is a member of the Democratic Labour Party, said that this issue could eventually be a thorn in Government’s side.

“If they want to see how much problems this could cause, they could do a national poll now, and see exactly how Barbadians feel,” the contractor said, virtually throwing down the gauntlet at the feet of the David Thompson-led administration.

Barrack added that two more private enterprises had approached him in the past 24 hours to buy over the debt from Government, and he had passed on the information to his lawyer, Sir Richard Cheltenham.

“I really don’t care how the money comes, once I get it. I am open to all offers,” he said. Barrack noted that the two new interests are willing to pay him the entire $63 million as a single payment, but also want exclusive rights to interest and damages arising out of the court award.(Nation News)

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27. December 2009 by admin.

SISTER, SISTER. Sonia Frederick (left) greeting her sister Margo Harris with a big hug. Harris has not spent a Christmas in Barbados for two years. (Picture by Nigel Browne)

by CARLOS ATWELL

THEY CAME IN their hundreds from the snow- battered states in North America wearing boots and coats, for a warm Barbados holiday home.

It was two days before Christmas and all through Grantley Adams International Airport many people were stirring as they greeted loved ones on Wednesday.

Letitia St Hill has been living in New York for the past 17 years, but has only been visiting Barbados for the past four.

She wished she could stay here, but planned to make the most of it until it was time to depart.

“I come to see my children and grandchildren. I also plan to go to the beach and go to Chefette - there’s no Chefette in New York,” she said.

But a major reason she was home for the holidays was to escape the bitter cold and “20 inches” of snow blanketing New York.

This was a recurring theme among all of the people interviewed. Rhonda Griffith and her daughter Zenobia Weekes, who also flew in from the Big Apple, said it was “cold with a lot of snow and more expected.

“I come home for the ‘goodies’ - the good Bajan food my mum cooks, like jug-jug, and to rest and spend time with my family,” Griffith said.

Weekes, on the other hand, said she thought Barbados was fun because “it was summer all the time”.

Couple Sharon and Nicolas Ellis are also here for the fun factor. Sharon is a Barbadian while Nicolas is Jamaican, and they have been living in New York for 19 years. However, they both agree Barbados is more fun.

The pair have a home in St Philip and plan to enjoy themselves on the beach, picnicking, and with “one big house-warming party”.

“We prefer here to the cold and boring New York. It’s pretty cold and disgusting right now and you don’t have the same kind of fun there,” said Nicolas.

Patricia Weekes also lives in New York and plans her vacation so she is free to come to Barbados for Christmas.

“Right now it’s freezing there,” she said.

She was greeted by her daughter, Suzanne Goffar, and will be staying with family in Brittons Hill, St Michael, where she said she planned to spend the next 17 days with “grandkids, friends, cooking and eating.”

There was a lull in the arriving passengers as flight delays were announced.

Many people waited anxiously as the minutes slowly ticked by, but when the time came the airport quickly became a hive of hugs, kisses and “excuse me’s” as people filled the arrival area.

The Buckland family flew in from a bit further north. They came home for the holidays from Toronto, Canada, with a special surprise.

Claire Norville-Buckland, a former Barbados Scholar, and her husband, Ras Buckland, brought their eight- month daughter, Arianna, to Barbados for the first time and away from the “very cold” Toronto.

Norville-Buckland said Arianna might have been born in Canada but was a Barbadian at heart. The occasion was made even more special as they were met by broadcaster sand insurance adviser Maurice Norville, Arianna’s grandfather.

The trio are only here for a week before they head to St Lucia to visit Norville-Buckland’s mother, but it will be a week where they will “go to church, see family and eat and relax lots”. (Nation News)

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