Sun | Aug 20, 2017

Mortgage Bank rejects Auditor General Department's report

Published:Friday | January 13, 2017 | 1:27 PM

The Jamaica Mortgage Bank (JMB) has rejected assertions by the Auditor General Department's (AGD) that the Bank has a poor credit assessment process which has resulted in potential losses of $225 million.

An Auditor General report tabled in Parliament on Tuesday scolded the Board and Management of the bank, which it said did not consistently conduct adequate due diligence before approving loans.

The Jamaica Mortgage Bank (JMB) 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.

READ: Auditor General says inefficient Mortgage Bank facing $225m in potential losses

However, in a release to the media JMB says it rejects the AGD’s suggestion that the Bank is being reckless in its granting of loans.

The Bank says a review of its record would indicate that for the 2010-2016 period reviewed by the AGD, it financed 27 projects with a disbursement value of $4.6 billion to provide 1,750 housing solutions.

JMB says of those 27 projects, 17 were successfully completed, delivered and fully repaid.

It says five of the remaining 10 projects are still under construction and one is currently being repaid.

JMB says four loans valuing $378 million have been classified as non-performing, which is slightly above the international benchmark for the wider financial industry.

The Bank says 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 applied to those that were successfully completed and repaid.

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