MARIANAS HOMEOWNERS FACE FORECLOSURE

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Housing director seeks US$10 million to buy bad loans

By Gemma Q. Casas

SAIPAN, CNMI (Mariana Variety, Feb. 17, 2009) - More than half of homeowners in the CNMI who borrowed from the Northern Marianas Housing Corp. and three different banks are delinquent in their payments and will soon be homeless unless they settle their debts.

NMHC officials said they need at least US$10 million to buy out the bad loans.

Joshua Sasamoto, corporate director of NMHC, told the Commerce and Tourism Committee of the Saipan legislative delegation yesterday that the U.S. Department of Agriculture already gave NMHC an "ultimatum" -- it is ready to foreclose the homes of 38 families who have not paid their accounts for years.

"The loans are in default. We don’t have cash [to rescue the borrowers]. The only recourse is to sell their assets," he said.

Marcie Tomokane, vice chairwoman of the NMHC Board, said they want to help the families facing foreclosure but government intervention is needed.

"We need US$10 to US$11 million to help them," she said.

Job loss, cuts in work hours, retirement, illness, injury or death in the family were among the reasons for the high delinquency rate. At least 48 homeowners are in default and 33 others are delinquent in their accounts with the USDA, NMHC stated.

NMHC administers several home loan programs. These include the NMHC Direct Family Home Loan; the USDA RD 502-520 program; and bank guaranteed home loans through Bank Pacific, Bank of Hawai΄i and Wells Fargo.

Sasamoto said under the NMHC DFHL program, 229 homeowners were given loans. But as of 2007, 56.33 percent of them were delinquent in their payments.

At least 82 of these were referred to collection agencies and 32 were undergoing foreclosure process.

Accounts referred for collection are given notice of default.

If after a certain period, they fail to pay, their accounts are referred to the court for foreclosure.

They have at least one year to redeem their property after it’s been foreclosed.

In the USDA program, 230 loans were given out but 35 percent of them are currently delinquent.

Bank Pacific approved 94 home loans through the NMHC guaranty program. Of this, about 15 percent are delinquent.

Bank of Hawai΄i, which provided loans to 26 people for NMHC, has a delinquency rate of 30.81 percent.

Wells Fargo has a 14.8 percent delinquency rate for borrowers under the NMHC guaranty program.

Homeowners under the Veterans Affairs housing program have a delinquency rate of 25 percent.

Sasamoto said the worsening economic crisis, the unprecedented rise in the prices of basic commodities, utilities and fuel, further compounded by the austerity holidays, made it very difficult for many borrowers to pay their mortgage on time.

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