By Susan Smith, Staff Reporter
One of several communities which was ravaged by Hurricane Ivan.
THE PUBLIC'S response to the special hurricane recovery loans has been very low. This is the view shared by several of the financial institutions offering these loans in the wake of the disaster.
Less than $40 million was disbursed in special loans from four of the financial giants which offered the facility. These include a prominent commercial bank, two major credit unions and a building society. Furthermore, this $40 million represents fewer than three hundred applications combined from all four institutions with the commercial bank having the bulk of the applications.
"The take up rates has been pretty low on the special recovery loans," said Gavin Lowe, assistant vice president for operations at the Victoria Mutual Building Society. He revealed that less than 10 persons had taken up the loan offer from his institution. The National Commercial Bank (NCB) which has a wide network of branches, reported having disbursed approximately 150 loans valued at about $30 million. Meanwhile, City of Kingston Credit Union (COK) and Churches Co-operative Credit Union respectively disbursed $4 million and $5 million of their hurricane special recovery loans. Manager of credit administration for Churches Co-operative Credit Union, Janyce Robinson said the average amount loaned to members of that organisation was $100,000 their maximum offer.
REASON FOR THE UNDERUTILISATION
The financial experts speculate that the very low response from the public is mainly a result of persons having a great number of financial alternatives from which to choose. One primary recourse has been to personal savings.
The Financial Gleaner was told that most persons chose to take a moratorium on loan repayments as an alternative to the special loans even where the interest rates on special loans were extremely attractive and application criteria very basic.
Almost all the institutions included loan waivers and moratoriums in options to clients. However, not all included a special hurricane recovery loan facility.
"A lot of them went for moratoriums on existing loans thus pushing back their monthly payments," said Donovan Reid, retail product officer for the retail banking division at NCB.
"This seems to be more economical," he added, while pointing out that the special recovery loans were offered at the best concessionary rates by NCB. Mr. Reid also revealed that most of the individuals who applied for these loans were persons who suffered damage to their roofs. Some of the financial experts have also concluded that perhaps the extent of the damage to houses and properties was not as severe as many believe.
"The low take on the loans tells me that the damage done was not too severe," said Mr. Lowe. "Or individuals might be utilising their resources instead of increasing their debt portfolio."
Dennis Hickey, marketing Manager for COK thinks members of his organisation have been resilient this time around by making continuous preparations.
"People have been very proactive in sorting out and taking care of themselves," Mr. Hickey said. "They have been consistently accessing our home improvement loans to improve their structures." In most cases the financial institutions only requested proof of ownership or interest in the property, the last two pay slips or an estimate of the damage to process the loans." Most also gave individuals no longer than five to ten working days for processing the loans. Both Mr. Hickey and Mr. Reid deny speculation that perhaps people anticipated being asked for too many documents to apply for loans and were put off.
