Banks are putting up more homes for auction as pandemic-induced moratoria end with some customers failing to resume payments as scheduled.

At the beginning of the pandemic, financial institutions granted customers a moratorium on loan payments, with the duration varying from a minimum of 90 days to a year, to help ease the pressure from the fallout.

As these financial entities go after outstanding payments, some are sending properties to auction. Properties affected are usually over 90 days past the last service date, without any payment. However, how long it takes before a property is sent for auction depends on the financial institution.

National Commercial Bank (NCB) informed the Jamaica Observer that 50 per cent more properties were sent for auction in 2021 compared to 2020.

For 2021 this represents approximately nine properties.

Meanwhile, participants in the auction trade disclosed that more properties are being sent to auction. In contrast, more borrowers appear to be making efforts to pay outstanding balances to avoid losing their houses.

NCB shared with the Business Observer that “Approximately 33 per cent of the eligible properties have been removed as a result of balances being paid up.

In total, approximately 19 per cent of customers linked to the bank’s mortgage portfolio were offered a moratorium for the calendar year 2020. The bank shared that about 90 per cent of its customers have been able to maintain their loan obligations.

Jamaica National Bank, one of the island’s largest private mortgage providers, indicates that its relief programme for mortgage holders affected by the pandemic ended in May 2021, and so more properties linked to delinquent loans are being sent for auction.

However, the bank indicates that it is still trying to “work” with clients with outstanding balances.

The company shared: “Anticipating the economic impact that the COVID-19 pandemic would have on many Jamaicans, JN Bank, at the start of the pandemic in 2020, sought to support its members by designing and implementing a comprehensive and structured relief programme to include moratoria on loans, and debt restructuring to assist members, businesses and communities with overcoming the challenges. Although our relief programme ended in May of this year, and the majority of our mortgagors have since returned to normal and are servicing their loans, we continue to work with any member who may still be experiencing challenges due to the continued difficult economic climate.”

The company said that, despite the rise in the number of properties listed for auction, “we saw a significant increase in the number of properties withdrawn because of members’ efforts to clear their arrears. We urge any member who may still be having challenges to reach out to us so that we can find ways to assist them.”

The Business Observer reached out to the National Housing Trust (NHT), which has the largest mortgage portfolio, regarding its auction numbers.

No response was received. However, its annual report shows that at year end 2020, there were $54 billion in impaired loans. The impaired portfolio increased by $3.21 billion in 2020, compared to $1.79 billion in 2019.

In previous reports, the trust said it offers mortgagors in trouble the opportunity to restructure their loans. If that option fails, properties are first sent to auction, and if they are not sold, offer them for sale by private treaty.

JMMB Bank, in an update provided to the Business Observer concerning auctions and impaired loans, stated, “At the onset of the pandemic, JMMB Bank sought to assist its clients in navigating the challenges experienced with a lifeline by extending moratoriums, up to December 31, 2021. As such, the bank would not have auctioned any properties during 2020 or 2021, for loans during that period.”

The Business Observer reached out to the Bank of Jamaica for an update on the total bad debt affecting the mortgage portfolios held by commercial banks and the credit union sector, and whether the level of bad loans was a matter of concern. However, no response was received up to press time.