JIS News

An Act to amend the Mortgage Insurance Act was passed in the Upper House yesterday (June 20).
The Act expands the definition of ‘lender’ to include financial institutions licensed under the Financial Institutions Act and reduces the portion of insurance fees to be paid into the mortgage insurance fund from four-fifths to three-fifths.
The Bill further seeks to clarify the provisions of Section 14 (1) of the Act and increase from one-fifth to two-fifth the portion of insurance fees that may be utilized under that section to meet administrative expenses and to provide for the power to make regulations under Section 18 of the Act be subjected to affirmative rather than negative resolution of the House of Representatives.
Minister without portfolio in the Ministry of Finance and the Public Service, Senator Don Wehby who piloted the Bill, explained that the amendments will allow for a greater pool of funds for primary financing, which in turn can be made available to mortgage granting institutions and reduce down payments for purchasers.
He added that the amendments will result in an increase the coverage of risk in case of default on payments; significantly increase the housing stock and increase the amount of mortgages that can be afforded, which in turn will increase the pool of funds available to support a second mortgage market.
The Jamaica Mortgage Bank (JMB) is entrusted with the responsibility of administering the Act and Regulations on behalf of the Government of Jamaica.
The Bank therefore provides mortgage insurance coverage for loans made to individuals by an approved lender for: purchasing or erecting dwelling houses; purchasing residential lots; purchasing agricultural lands; and purchasing commercial property.
“Lenders must be approved by the Ministry of Housing and maybe a loan insurance or trust company, bank, building society, Cooperative including Credit Unions or any other society authorised to lend money under the security of real estate or immovable property,” Senator Wehby said.
He added that the Mortgage Insurance Act and regulations are 48 years old and as such several of the provisions are obsolete and in its efforts to successfully administer the law the JMB is unable to compete on a commercial basis with other providers of mortgage insurance.
“Additionally consumers have developed a more sophisticated taste and are demanding better homes and more affordable financing to procure them. The objective therefore is to allow the bank to play a more active role in assisting Jamaicans to acquire suitable and affordable housing and compete effectively with other providers of mortgage insurance products,” Senator Wehby said.
The Mortgage Insurance Act and Regulations seeks to give prospective home owners the opportunity to access affordable mortgages whilst providing tangible security for lenders.