Thu | Nov 26, 2020

Mark Wignall | Breaking the back with a bank loan

Published:Sunday | November 22, 2020 | 8:18 AM
Anthony Minott/Photographer
PNP supporters await the arrival of their new party president Mark Golding outside the party headquarters on Old Hope Road, on Saturday, November 7, 2020.
Anthony Minott/Photographer PNP supporters await the arrival of their new party president Mark Golding outside the party headquarters on Old Hope Road, on Saturday, November 7, 2020.
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It Has long been established that it is socially acceptable to trust the village pastor over the town pickpocket. But even though the pickpocket may have a sharp knife in his waistband and may use it if cornered, most times, he sticks out, and he easily attaches to himself that label of being hated and reviled.

Compared to the pickpocket, the pastor is royalty. When the pastor errs, the congregation tends to accept that his sins are driven by wicked accusers. When the pickpocket flees through the town square, even those who abide by the law are driven to hurl rocks at him and mount their soapboxes of superior virtue.

So, many of us know how societies like ours exist. Many terrible wrongs are kept beneath the surface while ackee thieves are given over to prime time news. And a lifetime of shame.

Fifty years ago, we knew who we could rely on to be labelled trustworthy. The village constable, the school principal, the school inspector, the justice of the peace, the doctor. In the urban areas, one could add to that list the bank manager. Or, at the least, the bank.

What we never banked on was the extent to which power would corrupt not just employees who operate as stewards of corporations, but the very large companies themselves. And shockingly, they do this quite openly, with the full support of what they decide the discretion the law allows them.

Imagine yourself in the following predicament. You borrow only from a bank for the purpose of launching a trading and distributing entity. You make the agreement bankable by placing your palatial house (multiple bedrooms, swimming pool, detached villa, tennis court, etc.) in a swanky area as collateral.

The worst happens. The loan is not being serviced, and the bank moves against you. It has the right to do so based on powers bestowed under their mortgage agreement. You accept that your world is falling down, but you see a little light at the end of the tunnel. When you examine the market value of the house, the assessed value, and the price it is likely to fetch in the real market place, you are certain that its sale will satisfy the loan balance, including interest and expenses, and the mortgagor will be provided with the difference between the two.

In such a situation, the bank loses nothing. One would assume that the bank would be in a rush to dispose of the asset held, especially if the house is worth far more than the indebtedness.

BANK HAS BIG CARDS

But what if the bank decides that it is solely in its interest to delay the sale. And, why would it make such an irrational decision? What if the bank decides that to deliberately stall the sale and keep it in a state of limbo would provide it the opportunity to attach daily interest rates to the loan balance?

In that situation, what power would the mortgagor have to force the hand of the bank? At the stage when the accrued interest rates plus the principal exceeds the maximum value that the market is prepared to pay for the house the bank then decides that the time is right to sell the asset.

At that stage, the mortgagor has no hope of ever seeing a single cent from the transaction. But it is not yet finished.

To add injurious insult to ugly injury, the bank sells the property at private treaty for a price that seems specifically suited to the new owner. After the sale, the bank then claims that the debt is still not cleared and moves against the mortgagor for the added amount.

The worst part of this is that it seems to fit into what the bank sees as its broad definition of what the law allows. Or, at the very least, what the discretionary powers under the loan agreement frees it up to do.

There is nothing moral or ethical about this, but the very fact that this is done, and without fear, would make it seem that it is perfectly legal. This happens in Jamaica, and many just suck it up, pop their depression pills, and wallow in their depleted lives. Silently and sadly.

PNP WILL GET IT RIGHT

As the PNP internal election were under way, I was told by two high-ranking PNP connected persons that there were at least four puppeteers in the PNP supporting Lisa Hanna who were living in the hope that she would win the presidency. For one of them.

The premise was that if she won, she would not be able to hold it more than two years. During those two years, they would grow an anti-Hanna faction, and at the end of it, they would move against her with the objective being placing the little one with the big name within striking distance of the top job.

Well that didn’t quite work out too well. With Mark Golding as PNP president, none of us should expect that he will create a messiah-like leadership in the shape of Michael Manley in 1972. Portia came close to that in what her leadership promised in the early to mid-2000s.

A Lisa Hanna victory would have propelled her to produce a version of herself that would pretend she had the power to displace Andrew Holness without an understanding that PNP unity was the only lubricant that could drive the party machinery towards such a challenge.

As it is now, the PNP’s best bet is to keep low but remain relevant on a narrow range of selected issues. The COVID-19 issue has to be challenged only when Golding is wearing kid gloves. Education delivery in these perilous times can be taken on without fear of cheap politicking.

I think it is safe to say that both political parties have settled on the idea that the Jamaica Labour Party administration has the keys to the store. For now, it would suit the opposition PNP to be silently relevant. Timing is key.

- Mark Wignall is a political and public-affairs analyst. Email feedback to columns@gleanerjm.com and mawigsr@gmail.com.