Sat | Sep 22, 2018

Mortgage bank strikes deal with YP Seaton

Published:Wednesday | February 21, 2018 | 12:00 AMAvia Collinder/Business Reporter
York Seaton, principal owner of YP Seaton & Associates and Ebony View Limited.
General Manager of the Jamaica Mortgage Bank, Courtney Wynter
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Jamaica Mortgage Bank (JMB) says a debt settlement with associated companies Ebony View Limited and YP Seaton & Associates Company Limited on a loan that backed a housing development in St Catherine would substantial reduce its non-performing loans or NPL portfolio.

JMB General Manager Courtney Wynter said the details of the agreement were confidential, but noted that the companies were JMB's largest debtor.

The settlement comes in the wake of a court victory for JMB in a billion-dollar lawsuit it filed more than three years ago.

In late 2016, concurrent decisions in the Supreme Court awarded $1.15 billion - inclusive of interest, court fees and attorney fixed costs - to JMB against Ebony and YP Seaton & Associates, both of which are owned by York Seaton.

"The bank negotiated a settlement agreement with the developer, the details of which we are not at liberty to disclose," Wynter said.

His disclosure of the agreement followed an assessment by the auditor general laid before Parliament in 2017, which charged that loan policies at the state-owned mortgage bank were unevenly applied and negatively affecting its ability to provide funds for housing.

NPLs at JMB has averaged 68 per cent of the total loan portfolio over a six-year period ending March 2016, based on the auditor general's assessment. But the auditor general also noted that the bad-debt portfolio had shrunk by $438 million since 2011.

JMB's annual reports indicate that the mortgage bank had impaired loans of $1.01 billion in FY2011, which had fallen to $572 million by FY2016 within a total non-performing portfolio of $1.1 billion at the latter period.

Wynter said in a release in response to the auditor general's report that the analysis was in part based on outdated facts, that some loans predated the current management of the bank, and that the assessment predated the deal with Ebony View/YP Seaton & Associates.

JMB projects that its NPLs will fall within a range of $460 million to $480 million by the end of March 2018, "bearing in mind the bank is continuously working out its NPL portfolio," Wynter told the Financial Gleaner.

"The long-term impact of the Ebony agreement, assuming no additional NPLs, as well as other collection initiatives, will put our NPL at approximately $300 million by end of fiscal 2019," he added.

JMB sued the construction companies over a $300-million loan that was issued in November 2006 at 18 per cent interest for the Ebony View development by YP Seaton & Associates.

The companies were to repay the loan within two years of disbursement, but JMB was repaid only $792,945, according to court filings. JMB sued the companies for $1.04 billion, plus interest and other charges, in September 2014.

JMB had also sued York Page Seaton as principal owner of the companies, and judgement was granted in the sum of $180.04 million, plus interest.

An application by the defendants for a stay of execution of the court's decisions until ancillary claims were heard was not granted, and permission to appeal the ruling was also denied.

The court placed a charge in favour of JMB on 60 individual lots in which the defendants have interest, and appointed five financial institutions as garnishees - National Commercial Bank, NCB Capital Markets Limited, Jamaica Money Market Brokers Limited, the Bank of Nova Scotia Jamaica Limited, and Mayberry Investments Limited - in relation to the $1.15 billion judgement against Ebony View and YP Seaton & Associates, and the $180 million judgement against York Seaton.

Neither York Seaton nor Anna Gracie of the law firm Rattray Patterson Rattray, the legal representatives for Ebony View and YP Seaton, responded to requests for comment on the JMB agreement.

avia.collinder@gleanerjm.com