New wave of foreclosures? We think not…
While the CI Governments response to COVID-19 has been quick and so far seemingly very effective at keeping the community safe from harm, many are concerned we may see a new wave of foreclosures hit the Cayman real estate market. With our tourism product all but shut down, employees of hotels, airlines, restaurants, water sports and many other industries are being furloughed or having their hours dramatically cut. Without these wages many homeowners are wondering how they’ll be able to afford their mortgage payments. And now for the good news…
We think there are actually many reasons we won’t see a surge in the number of foreclosures… Here are just a few of those reasons:
Governments are stepping up
During the previous recession, governments were slow to recognize the challenges homeowners were having and waited too long to grant relief. Today, action is being taken swiftly. Just this week:
- In the Cayman Islands Government announced stipends for taxi drivers, watersports operators and other effected employees
- In the US The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days and The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.
- Interest rate drops in the US were followed by the Cayman lenders.
The Private Sector is Stepping Up
- Butterfield announced a COVID-19 customer relief initiative which takes the form of a three month automatic payment deferral program on all residential mortgages and personal loans providing much needed relief.
- Other local lenders are following suit and have asked all impacted clients to reach out to their loans officers to arrange for payment deferrals.
- Dart, Cayman’s largest private sector employer, said this week that they were committed to continuing to pay all employees affected by their hotel closures and would make “financial provisions: for staff unable to work in the weeks to come.
- Other private sector employers are following suit by committing to continue salary payments for as long as possible and in other cases redeploying front line staff that would otherwise be furloughed.
- For Cayman’s ultra-sophisticated financial services sector, work from home initiatives are old hat, business as usual will continue in line with some of the most robust business continuity plans that exist world-wide, largely put in place post Ivan. For one of our largest business sectors there will likely be little to be no change in salaries being paid.
These are not going to be easy times, however Cayman locals and residents are resilient. The lessons learned from the last crisis have better prepared us to weather this financial storm. For those who can’t, help is on the way. Both Government and Private sector have committed to providing this relief. We are in this together and together we will get through this.