In accordance with its policy guidelines, ECHMB will purchase mortgages ranging in size from EC$75,000.00 – EC$1000,000.00. Currently, the average balance on mortgages held by ECHMB amounts to EC$181,196 (US$67,110). Most of the mortgages granted by the institutions in the OECS sub-region are for loans in excess of EC$100,000 (US$37,0037).
ECHMB will purchase mortgages with maturity up to thirty (30) years. The average maturity for the mortgages that are currently held by ECHMB is fifteen (15) years. Generally, institutions in the mortgage origination business will grant mortgages with maturity periods ranging from 10 – 35 years.
2. The Primary Lender must also be subject to regulation by an approved regulatory body such as a Central Bank, Registrar of Insurance or Registrar of Co-operatives. In this regard, the Primary Lender shall be subject to regular off-site surveillance or review and periodic on-site examination/inspection or audit.
3. The Primary Lender should have at least three years of satisfactory experience in mortgage origination, property appraisal, administration of mortgage loans, and general mortgage underwriting or, alternatively demonstrate its ability to make sound underwriting judgements and service mortgage loans to the satisfaction of the Company.
This experience must be reflected in the specific quality, qualification and experience of the staff of the Primary Lender and related professionals involved in the mortgage underwriting process. The Company will, if it deems necessary, check the qualifications of the Primary Lender’s underwriters, real estate appraisers and other professionals. Minimum information on the Primary Lender and staff to assist in this assessment will be required. For instance, three (3) years audited financial statements, information on the size and nature of mortgage portfolio, mortgage underwriting polices and guidelines must be available. A Primary Lender must undertake a commitment to improve and maintain mortgage-underwriting standards via training such as the Company’s Mortgage Underwriting Seminars.
4. The Primary Lender must agree to be submitted to periodic audits or reviews of its mortgage portfolio and mortgage underwriting process by the Company or its designate, to ensure that proper mortgage underwriting standards are being maintained.
5. The Primary Lender must maintain certain minimum standards regarding revenue recognition, provisioning and effecting security, as well as maintenance of a minimum default record or history. However, these criteria might be considered as part of the assessment in relation to paragraph 3 above rather than explicitly as a separate criterion.
6. There shall be a limit on the exposure of the Company to the value of mortgages held in its portfolio originating from any one Primary Lender. Not more than 20% of the assets of the Company shall be so held unless otherwise determined by the Company’s Board.
7. The Primary Lender must also be further responsible for compliance with all applicable legal requirements.
Within the ECCU region market rates on residential mortgage loans could vary between 6.75% – 12%. But there are subsidized housing programs offered by some governments, offering residential mortgage rates as low as 4.75%.
Most of the mortgages in the OECS sub-region are denominated in Eastern Caribbean Dollars (EC$). EC$2.70 = US$1.00. However, there are some commercial banks in the sub-region with mortgages denominated in United States Dollars (USD). ECHMB’s funding has generally been in EC$.
ECHMB is a secondary mortgage institution that provide liquidity to financial institutions including commercial banks, credit unions, mortgage finance companies, building and loans societies, and insurance companies. ECHMB does not provide funding directly to individuals. However, individual may benefit from funding provided by ECHMB to the institutions referred to above.
In addition, ECHMB is different to a commercial bank that takes deposits/savings from individuals and originate mortgages to individuals. The main objective of ECHMB is raise funds on the capital market and use the proceeds to purchase mortgages from primary lenders or mortgage originators in the primary mortgage market.
ECHMB does not provide retail-banking functions. It main purpose is to buy and sell mortgages in the secondary mortgage market.