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JIS News

Since its inception some 35 years ago, the Jamaica Mortgage Bank (JMB), has been making home ownership affordable for many Jamaicans.
As the only financial institution of its type in Jamaica, the JMB was established with the broad concept of fostering the development of housing islandwide through the mobilization of loan funds to public and private sector housing developers and to other lending institutions; the operation of a secondary mortgage market facility, and the provision of mortgage indemnity insurance services.
“We set out to promote the construction of environmentally safe and affordable housing units for all Jamaicans, and over the years the JMB has implemented a number of projects and programmes, aimed at assisting Jamaicans to own their own homes,” Director of Projects and Planning at the JMB, Patrick Peart, tells JIS News in an interview.
At present, he elaborates, the bank has a portfolio of 35 projects islandwide, providing 5,075 housing units, with total funds amounting to $2.8 billion.
“This financial year to date (April to September), the bank intended to finance the construction of 1,486 units at a cost of $1.4 billion. However, we have committed in excess of $1.6 billion for 2,361 housing units. This represents a 58 per cent increase in our housing units and a further 15 per cent increase in funds committed,” he informs.
As part of its efforts to provide affordable housing, the bank in January of this year was not only able to reduce its lending rates to housing developers by three percentage points, from 21 per cent to 18 per cent, but also concluded a Line of Credit Agreement with the Economic and Social Development Bank of Venezuela (BANDES), through the San Jose Accord.
“Through this loan, the bank will be able to access up to US$2 million at a concessionary interest rate, and this will allow the bank to pass this on through lower house prices, which will benefit prospective homeowners,” he explains.
Mr. Peart notes that under this agreement, “it is stipulated that funds should be used to fund projects that would have huge social and economic benefits. We are seeking to use these funds to finance projects targeted at the lower income earners”.
The bank, he informs, has identified a scheme in Ebony View, St. Catherine. “Under this project funds will be used to provide roads, water, electricity and sewer facilities for some 325 informal settlements. In addition, we intend to construct 100 low income, 2 bedroom units. There are plans in the pipeline to execute similar projects in Clarendon,” he notes.
The Projects and Planning Director points out that the bank has been involved in housing development from the 1970s. “Over the past 35 years, the bank has implemented a number of projects and programmes, which have enriched the lives of many Jamaicans at the lower end of the economic strata,” said Mr. Peart.
During the 1980s, the bank secured funding from the United States Agency for International Development (USAID) and the Government of Jamaica to fund projects, such as Squatter Settlement upgrading project, Core/Start-A-Home and Rural Home Improvement and Mortgage Loans.
The Squatter Settlement upgrading programme involved the provision of roads, water, electricity and sewer systems at many informal settlements. The aim of the project was to upgrade and provide vehicular access, water supply, and sewage disposal facilities and encourage the legal ownership of land.
“During this period there was a decline in construction, there was a lot of informal settlements, the JMB needed to halt the trend, so the upgrading of these squatter settlements was taken on as a project,” he says.
All the lots, both privately and government owned, were sold on credit to the occupants and monthly payments were made to the then Ministry of Construction.
In addition, during that period the JMB established the Core or Start-a-Home Programme. Under this project, one and two bedroom houses were built and sold at affordable rates to Jamaicans.
Under the Rural Home Improvement and Mortgage Loans, the JMB disbursed loans totalling $8 million to the Jamaica Co-operative Credit Union members islandwide for improvements to existing homes. Mortgage loans were also provided to assist in the purchasing of houses.
The JMB not only facilitated the provision of affordable houses to Jamaicans through the granting of loans to developers, but also under the Jamaica Mortgage Bank Act of 1960, can carry out other activities.
He informs that the bank can guarantee loans made from private investment sources for building developments; sells investments of whatever kind when appropriate, lend money on security to be used for the construction of premises for private residential purposes or for commercial or industrial nature; lend money on mortgages and carry out any other transaction involving mortgages, furnish financial advice and provide or assist in obtaining managerial, technical and administrative services for persons engaged in building development in Jamaica.
However, the single most important feature that distinguishes the JMB from Building Societies and other mortgage institutions is its operations within the secondary mortgage institution. At present, the bank is finalizing an agreement with the National Housing Trust (NHT) for a $500 million facility to expand the Secondary Mortgage Market.
Mr. Peart explains that the JMB buys mortgages from existing institutions when these institutions need to improve their liquidity and the bank sells mortgages to these institutions when they are very liquid.
This gives approved mortgage sellers the chance to liquidate a loan instead of waiting for the end of the maturity period and so provide resources for new mortgage commitments for home purchasers. Through this market, the bank carries out one of its principal functions, that of making mortgage financing more easily accessible to low and middle income homeowners.
Mr. Peart informs that in the area of Mortgage Indemnity Insurance or the insuring of residential and commercial mortgage loans, the bank’s current portfolio includes 25,564 issued policies, totalling $722 million. The value of the Mortgage Insurance Fund was $765 million in March of this year. This represented a 16 per cent growth over the previous year.
At the beginning of April 2000, the bank had an asset base of $1.989 billion, and at the end of March 2006, this had grown to $3.561 billion, representing a growth of 79 per cent over the 6-year period. The bank’s equity moved from $1.527 billion in 2000 to $2.2218 billion in 2006, registering a 45 per cent growth.
The bank has also recorded significant growth in the area of loan disbursement. In March 2000, the bank disbursed $510 million in loans, while at the end of March 2006, the annual amount disbursed totalled $1.077 billion.
“At the JMB, we are not driven by profit but by the number of units we finance.we really try to foster and promote affordable housing, that is what our bank is about,” Mr. Peart says.