Auditor General says inefficient Mortgage Bank facing $225m in potential losses
The Auditor General’s Department is reporting that the Jamaica Mortgage Bank is now facing potential losses of $225 million, because it has not been efficient at carrying out its mandate of financing safe and affordable housing for Jamaicans.
The Jamaica Mortgage Bank provides loans to developers and financial institutions for housing development.
However, the auditor general says because of poor loans management practices, the bank has not facilitated the development of affordable housing over the past six years.
The Auditor General's report which was tabled in Parliament yesterday scolded the Board and Management of the bank which it said did not consistently conduct adequate due diligence before approving loans.
The Auditor General's report showed that as at March 31, 2016, the loan portfolio of the Jamaica Mortgage Bank totalled $1.7 billion.
Of this amount, $970 million or 57 per cent has been outstanding for more a year.
The report also said over a six-year period, non-performing loans averaged 68 per cent of the total loan portfolio.
According to the report, inadequate due diligence resulted in the approval of five loans totalling more than $453 million, which did not result in the construction of any housing development.
In one instance in 2015, the Jamaica Mortgage Bank approved $77.1 million loan to finance the acquisition of more than 76 acres of land in Clarendon without fully determining the developer’s ability to repay it.
The Developer has since failed to repay the loan.
The report also says for non-performing loans, banks may be holding assets which may prove difficult to liquidate affecting the bank's ability to recover the full value of the loans.
The auditor general has demanded that the Jamaica Mortgage Bank improve its loan management practices to facilitate greater control over the loan approval and disbursement processes.