Mortgages generated at rates of two and five per cent, respectively, as advertised by the T&T Mortgage Finance Company Ltd (TTMF), may in fact be at higher rates than the average person will have expected. This was told to Parliament’s Public Accounts (Enterprise) Committee, chaired by Senator Wade Mark, yesterday.
Ingrid Lashley, managing director and chief executive officer of the TTMF, said the interest was valued based on existing Government policy.
Mark, who said the promised interest rates of two per cent and five per cent were false advertising, added: “There is a concept known as Truth in Lending and I myself am flabbergasted. I would have thought when an advertisement issues a mortgage which can be obtained at two and five per cent, respectively... one would come to the conclusion that this is in fact the so.
“But when you really explain to us that the two per cent really means five per cent and the five per cent really means seven per cent market rate, many customers would not know this.”
But Lashley said the two and five per cent were not “TTMF products,” adding they were administered on behalf of the Government.
“The difference in interest rate between the two per cent and the normal lending rate is subsidised by the Government. In an effort to reduce the subsidy over time the graduation was added to the product in October 2014... both the two and five per cent mortgage. TTMF is not at liberty to define Government policy.
“Our two per cent portfolio is now at $173 million and our five per cent mortgage is just creeping up at $15 or $16 million,” Lashley said.
On the tough economic times T&T is facing which has resulted in the mass retrenchment of workers, she said foreclosure on mortgages was not as easy as it appeared. In fact the foreclosure process could take as long as two years as the court matter itself could be very long.
Lashley said out of a database of some 15,000 clients 78 were retrenched people who had difficulty in meeting mortgage payments, as at December 2015.
“But it is not only 78. These 78 had fallen victim of the current economic circumstances. Our delinquency portfolio is greater than that,” Lashley said.
HDC clients, she added, were “better customers” as they mostly come from the public service and “salaried” people as payments were automatically deducted from their monthly salaries, mitigating the risk of delinquency. Regarding the organisation’s debt figure, she said that stood at 2.5 billion.
The TTMF is expected to merge with the Home Mortgage Bank (HMB) towards the formation of a T&T Mortgage Bank which Lashley said was approved by the Government.
“This would allow TTMF to sell mortgages to HBM... HMB being the source of these securitised products and selling them off to the capital market so that our funding is more sustainable,” Lashley added.
On challenges she said no clear guidelines had been given since the reintroduction of land and building taxes as at January this year.
“When you sell property as at today you are owing six months land and building taxes but we have not been able to obtain guidance as to how it would work.
“Vendors who are selling now are not paying the land and building taxes and it is possible that the purchaser who buy now may be owing six months land and building taxes without even knowing it,” Lashley said.
Concerns were raised by committee member Dr Tim Gopeesingh who said there were general uneasiness by members of the public that was mandatory for TTMF’s lawyers to be retained rather than a private attorney as preferred by the client.
But Lashley said the customer was welcomed at anytime to use a private attorney in preparation of the deed of conveyance.
However, she added that when the same attorney was used to prepare the deed of mortgage the fees were less, hence clients were channeled to the TTMF’s attorneys. But Lashley admitted that some of the organisation’s attorneys had been there since the company’s inception which was some 50 years ago.
This prompted Gopeesingh to say such attorneys had been collecting exorbitant fees over a period of time.