Golding to examine spending at National Housing Trust (NHT)
published:
Thursday | April 24, 2008
PRIME MINISTER Bruce Golding said yesterday that he intends to get answers from the board of the National Housing Trust (NHT) to determine why its funds appear to have been inappropriately spent.
The prime minister highlighted spending by the NHT on non-recoverable investments as a primary factor contributing to the trust's reserves drying up. The current NHT board has said that the trust was in danger of becoming insolvent within a few years, should operations continue on its current path.
The Inner-City Housing Project (ICHP) has already cost the NHT $2 billion, Operation Pride projects have cost $3 billion, and Government has spent $5 billion on the transformation of education. The prime minister said these withdrawals from the trust were bad policy decisions.
Needs formal answers
"When the decisions were being made for these huge levels of expenditure, which contributed to the trust being put in this impaired position, what was the consideration of the board at the time?" Golding asked yesterday, during his post-Budget press briefing at Jamaica House.
It is a question for which he claims he already knows the answers, but needs to be formally told.
Bleeding the coffers
On Tuesday, Golding announced an increase in some mortgage rates as being among a myriad of strategies to be implemented to ensure the trust's viability.
Golding pointed at the ICHP, for which the trust had committed $5 billion, as being one of the projects that have bled the NHT's coffers.
"Most of that money is being spent for persons who have never put one penny into the trust," Golding said. He added that approximately $6.1 million in mortgage payments is owed by persons who have benefited under the ICHP.
"The NHT has been converted, in terms of the Inner-City Housing Project, into a social welfare organisation," Golding said.
"We have to build houses in the inner city, and maybe we will have to seek the assistance of the trust, but it cannot be that the trust must absorb the losses," the prime minister added.
Revised interest rate structure
Golding's statement came a day after he announced several measures aimed at ensuring the viability of the NHT. Among the measures announced was an increase in some interest rates on mortgages.
The revised interest rate structure, which takes effect on June 1, will see mortgages in the five per cent interest rate band moving to six per cent, and those in the six per cent band moving to eight per cent.
Lower-income persons who paid interest rates of two per cent and four per cent will not be affected.
Other proposed strategies to boost NHT
Reduced Expenses
1. Cap interest paid on contributions at three per cent, effective April 1, 2008
2. Improve operational efficiencies
3. House all staff occupying rented space in the New Kingston area at 4 Park Blvd, by December 2009.
Increased Revenue
1. Increase yield on mortgage portfolio to at least 1.5 per cent above average interest on contributions, effective June 1, 2008.
2. Introduce adjustable rate mortgages
3. Eliminate preferential interest rates of two per cent offered to borrowers 55 years and older.
4. Modify the current joint finance mortgage model, effective June 1, 2008.
5. Increase peril insurance rates charged to 70 per cent of market over a four-year period, starting April 1, 2008.
6. Introduce fees for non-routine services offered to beneficiaries, effective April 1, 2008. Fees to be charged are below 25 per cent of market rates.
