Jamaica Mortage Bank

NAME OF FEATURE | THE GLEANER | SUNDAY, JUNE 6, 2021 13 JAMAICA MORTGAGE BANK 50TH ANNIVERSARY T HE MORTGAGE Indemnity Insurance (MII) product is a default insurance which allows a mortgage institution to grant a loan to an individual for a sumwhich exceeds the institution’s risk limit for a par- ticular mortgage. It, therefore, involves the insuring of the upper portion of a mortgage loan, above the usual limit, established by financial institutions, which are deemed ap- proved lenders. An‘approved lender’ is a lend- ing institution that is approved by the Minister of Housing for the purpose of making loans which may be insured under the Mortgage Insurance Act. The MII enables an approved lender to lend a higher percentage of the ap- praised value or selling price of a property. The mortgage insurance will, in essence, protect the mortgage lender against loss in the event of early default by the borrower, subject to the provisions in the Mortgage Insurance Act. The mortgage insurance product seeks to encour- age homeownership by enabling approved lenders to provide mortgages of up to 97 per cent of the purchase price or appraised value of the property, thereby enabling purchasers to effect ownership by paying a lower deposit, as low as a three per cent, in addition to their closing costs. While there are other benefits to both groups (borrower and lender), the main benefit to the borrowers of this product is that homeownership is made easier as the down payment on a home is kept to a minimum, persons can access homeowner- ship at an earlier age and have a longer time period to repay their loan. The main benefit to the lender is that the risk exposure on a loan is not increased by providing a facility of up to 97 per cent of the cost or value of the property as this risk is covered by the insurance and, therefore, the institution is able to maintain its risk profile. Further, the mortgage institution will be able to grow its loan portfolio and practise better risk-pricing strategies. The MII has been in operation since 1960, and operates under the provisions of the Mortgage Insurance Act of 1960. The Jamaica Mortgage Bank (JMB), since its inception on June 5, 1973 as a statutory corporation, has administered the MII product, on behalf of the Government of Jamaica. Under the ad- ministration of the JMB, the MII has grown from strength to strength, as seen in the table below. Since that date, there has been signifi- cant changes in the percentage andmonetary value of the property insured. In addition, the number of institutions on the approved list has also increased. 0257*$*( ,1'(01,7< ,1685$1&( 0,, Date No. of Undertakings Approved Lenders to Insure March 31, 2021 1134 • Sagicor Bank • Sagicor Life • First Caribbean Int’l Bank • Housing Agency of Jamaica • National Commercial Bank • Victoria Mutual Building Society • First Global Bank • First Heritage Coop Credit Union March 1, 2000 296 • Life of Jamaica • CIBC • Housing Agency of Jamaica The mortgage insurance will, in essence, protect the mortgage lender against loss in the event of early default by the borrower, subject to the provisions in the Mortgage Insurance Act. The mortgage insurance product seeks to encourage homeownership by enabling approved lenders to provide mortgages of up to 97 per cent of the purchase price or appraised value of the property, thereby enabling purchasers to effect ownership by paying a lower deposit, as low as a three per cent, in addition to their closing costs.