Dire situation?: The Bermuda Monetary Authority said one in 12 loans were non-performing in the second quarter of this year - up from 1 in 50 four years ago. <em>*Bermuda Sun file photo</em>
Dire situation?: The Bermuda Monetary Authority said one in 12 loans were non-performing in the second quarter of this year - up from 1 in 50 four years ago. *Bermuda Sun file photo

FRIDAY, SEPTEMBER 21: More people are being taken to court for falling behind on their mortgages this year compared to 2011.

There were 20 writs listed as mortgage defaults filed by the banks against mortgage holders in 2011 whereas 23 writs listed as mortgage defaults have already been filed this year.

In a Bermuda Sun compilation of statistics from the Writ Book, the average length of time from the date of the mortgage to the writ being filed was 59.1 months in 2011 compared to 84.6 months in 2012.

But the figures were slightly skewed by one extreme case where one homeowner was 27 years into their mortgage when HSBC filed the writ against them, this July.

In 2011, 40 per cent of the writs filed were on mortgages over four years whereas in 2012 it was 65.2 per cent.

The shortest turnaround time from the mortgage being signed and the writ being filed was in 2011 when it took just 22 months.

Two cases were settled in January with Cap G Bank being awarded $952,478.01 and $605,254.37 via repossession of the home.

Not all cases get listed as listed as mortgage defaults in the Writ Book as the Bank of Butterfield’s do not specify what they are for.

A spokesperson of the Bank of Butterfield said: “As one would expect, Butterfield has seen slight increases in the volume of payment defaults commensurate with the general economic challenges and increase in unemployment that we have experienced in Bermuda.”

The spokesperson said the bank’s top desire is to try to help the homeowner get back on track.

“Butterfield has dedicated personnel who work with homeowners encountering difficulty making payments. The objective is to work out a repayment solution that is acceptable to both the customer and the bank. 

“To that end, the bank will reach out to customers proactively when we begin to see that payments are not being made in full or in a timely way. However, if customers are feeling challenged in making their payments, we encourage them to reach out to the bank as early as possible so we can better understand and accommodate their circumstances.”

The spokesperson said Butterfield evaluates each situation individually. 

“If we have a customer who is finding it difficult to service his or her mortgage, we will work closely with that customer to come up with a suitable repayment solution.

“The bank views the repossession of a home as a last resort and generally only pursues such action when other solutions cannot be agreed. As such, there is not a set default period after which the bank will take definite action to repossess a home.”

Ian Truran, president and CEO of Capital G Bank and Capital G Trust Limited, said: “Capital G Bank Limited recognizes that Bermuda’s residents are facing a challenging economic climate. We are pleased to report that many of those clients that have been impacted by reductions in income have approached the bank and we have been able to work with them.

“Each set of client circumstances is unique. In some cases, we are able to permanently restructure payment obligations and in others we are able to implement temporary reductions in payments to accommodate a temporary reduction in cash flow.

“We encourage all of our clients to be proactive in considering their financial circumstances and where appropriate, to reach out to the Bank and update us on any changes that may require assistance from us. 

“Addressing these types of issues early is critical in our ability to support the needs of our clients.

An HSBC Bermuda spokesperson said: “HSBC Bermuda certainly has been, and continues to be, available to help guide customers through financial challenges successfully. HSBC Bermuda’s objective is to keep customers in their homes. We continue to work with our customers, encouraging them to contact us when faced with challenges, so we can understand the specifics.

“We have specialists available who are willing to work with customers, to look at their financial budgeting and help them to understand the options that are available to them. Circumstances are assessed, and alternatives that will help the customer are considered.”

Non-performing loans to total loans

 

MAR

JUN

SEP

DEC

2008

2.0

2.0

2.0

2.3

2009

2.5

3.1

3.2

3.1

2010

2.9

3.4

3.7

5.7

2011

5.4

6.7

6.8

7.0

2012

8.3

8.0

N/A

N/A

This includes all types of loans. Source: Bermuda Monetary Authority