The Jamaica Mortgage Bank (JMB) has refuted reports by the Auditor General Department’s (AGD) noting that it strongly disagrees with the AGD’s assertion that the bank has a poor credit assessment process.

In a press release, the Bank yesterday stated that it “unequivocally rejects the position” of reports carried by the media recently which gives the audience the impression that the bank is being reckless in its granting of loans.

It added that since 2003 the bank has funded more than 16,000 housing solutions for Jamaicans, representing approximately 35.2 per cent of all government assisted housing starts on the island up to 2016.

“Examples of these projects include Long Mountain in St Andrew, Magil Palms and Wedgewood Gardens, as well as the Angel’s Plaza, in support of the Angel’s Housing Scheme in St Catherine, Stonebrook and Emerald Estates, Trelawny, Huddersfield Estates, St Mary, Mango Walk in St James, Little Bay in Hanover and more recently, 1,080 student dormitory units at the UWI Mona Campus,” JMB reasoned.

A review of the bank’s record indicates that for the period 2010-2016, the bank financed a total of 27 projects with a disbursement value of $4.6 billion to provide 1,750 housing solutions.

Of those 27 projects, 17 were successfully completed, delivered and fully repaid. Five of the remaining 10 projects are still in the under-construction phase and one is currently being repaid. Four with a value of $378 million or 8.2 per cent have been classified as non-performing, which is slightly above the international benchmark for the wider financial industry, the release continued.

“Contrary to the AGD’s assertion that the loans became delinquent because of inconsistent assessment processes, these loans were subject to the same due diligence, project financing risk assessment and approval processes that were applied to those mentioned above that were successfully completed and repaid,” the bank said.

JMB added that whilst it practices continuous improvement, the bank recognises that in the process of meeting its mandate of facilitating home ownership by Jamaicans, it must exercise some degree of flexibility.

“JMB, like all lending institutions, does not operate in a risk-free environment but it employs processes and procedures that seek to identify, avoid, minimise or mitigate the risks inherent in all lending, particularly those which are often unique to construction loans,” it said.

The bank argued that AGD had neglected to state in its report that since 2010, successive management and Boards of JMB have implemented a number of policy and control measures which have resulted in marked improvement in the number of projects which are successfully completed, delivered and repaid and leading to a significant decrease in the number and value of non-performing loans.

“It is also important to note that the majority (approximately 70 per cent) of the loans comprising the Bank’s non-performing loans portfolio (cited as averaging 68 per cent by the AGD) consisted of legacy loans granted prior to 2010.

“Of these, one loan accounts for more than 45 per cent of the legacy loans and 32 per cent of the entire non-performing portfolio; the bank has since obtained a Judgement Order for the full repayment of this loan. Upon collection under the Judgement Order, the bank’s non-performing portfolio will be substantially reduced to a more acceptable level,” JMB said.

JMB noted that Section 5(2) of the Jamaica Mortgage Bank Act specifically empowers the bank to lend money on mortgages and to carry out any other transaction involving mortgages. According to the bank, its Project Financing Policy also allows for the financing of land acquisition for housing development.

However, for the two loans referenced by the AGD, unforeseen factors outside of the control of the bank and in one instance, the borrower’s control, have resulted in protracted settlement.

The bank noted that it expects full recovery of these loans and has already received serious offers to purchase at least one parcel of the development lands held as security. This will result in that loan being fully repaid, it said.