According to the Royal Gazette, as of mid-2012 there were $325 million in mortgages past due amongst the three local banks. That equates to hundreds of properties that are vulnerable to foreclosure … and the situation is probably far worse in 2013.
In turn that means that pretty much everyone who bought a house in the last 10 years is “underwater” (current value of house is less than purchase price). That’s frightening as property has been the largest investment for most Bermudians.
What this means is, that no matter how bad Government’s own predicament is, they have little leeway to raise taxes. Anything that raises the already tough cost of living will just endanger more household budgets.
It also means that Government must move swiftly to improve oversight of foreclosures as well as competitiveness and consumer protections in the mortgage market.
Bermuda always had such a buoyant real estate market that foreclosures were rare – and typically the mortgage would easily be covered. That’s not the case now, so homeowners may lose their house and still end up owing the banks staggering sums of money without the options and protections frequently afforded under law in most other countries.
So, the OBA must add “mortgage crisis” to the list of cleanups they have to take on.