NHT to start using credit reports

Some contributors to the National Housing Trust (NHT) could find it even more challenging to access benefits as the agency has advised that it will start using credit reports in the processing and management of loans starting this month.

The notice was issued by way of a newspaper advertisement on Wednesday, August 2.

The NHT said it will also begin to share information on its mortgagors with licensed credit bureaus shortly after the new policy takes effect.

In March, Finance Minister Audley Shaw, though tight-lipped, had signalled that a credit rating system for NHT applications was coming. “That's a detail that we have to look at. It's something that can be examined. It ought to be. Here again it comes back to personal responsibility — if they know that they are going to be subject to credit rating, then people will start drawing up their socks,” he stated at a press briefing on the continued $11.4-billion drawdown from the trust's coffers to support the national budget.

At least one trade unionist is expressing some concern about the new policy, which could put even more contributors at a disadvantage in a system which is already challenging for many to access benefits due to income levels and other factors.

“That in itself should not prevent NHT contributors who have satisfied the criteria for NHT loans from getting NHT assistance,” Union of Clerical, Administrative and Supervisory Employees President Vincent Morrison told the Jamaica Observer.

“NHT was specifically set up by the Government to assist workers. The vast resources that they have is due to the contributions of the employees and it is designed as a trust to assist the improvement of the housing arrangement of workers, who have to satisfy certain criteria. What ought to be the main criteria in causing workers to obtain benefit of the trust must be the criteria set up by the trust as it relates to employee contribution,” Morrison argued.

He said that in some instances late payment on credit facilities, which may land people in the “bad debt” category over time, is not the fault of the debtors in all instances and is, at times, due to delays with their employers' paying over deductions to institutions.

“The credit rating institution may or may not take that into consideration. So that in itself should not prevent a worker [from NHT benefits]. So there are a number of underlying factors that need to be taken into consideration,” Morrison said.

The NHT plans to write more than 8,000 new loans at a value of $17.8 billion during this financial year.

Last month Prime Minister Andrew Holness announced policy changes to NHT benefits that will enable contributors to access $5.5 million to purchase any home on the open market, and increases in the loan limit for another category of contributor by $1 million.

Previously only contributors who were building or buying into new developments, or whose prospective homes were completed and fit for occupancy as at September 1, 2015, could borrow up to $5.5 million for open market purchases. But under the new policy, qualified contributors can borrow up to $5.5 million to purchase any house on the open market.

But it is unclear whether the new credit rating policy will, to some extent, neutralise that benefit, as there is a possibility that applicants with unsatisfactory credit ratings could either find themselves unable to access the full benefit, or be offered higher interest rates.

According to bankrate.com, which publishes expert advice on major financial decisions such as mortgages and retirement plans, borrowers with high good scores tend to get lower interest rates on mortgages than those with low credit scores. The Observer was unable to ascertain exactly how the credit rating system will work, and is awaiting a response from the NHT to our query on the matter.