The ECHMB lends money to Primary Lenders domiciled in the Eastern Caribbean Currency Union such as Commercial Banks, Development Banks, Insurance Companies and Credit Unions secured by a pool of residential mortgage.
The basics are:
ECHMB purchase the pool of mortgage loans from Commercial Banks, Development Banks, Insurance Companies, or Credit Unions (“Primary Lenders”) at the weighted average interest rate of the pool of mortgages.
The Primary Lenders are subsequent contracted to collect and remit to the ECHMB (via a Transfer and Paying Agent Agreement), the principal and interest payments from home owners.
The Transaction is mutually exclusive to the ECHMB and the Primary Lender.
As compensation for performing the service of transfer and paying agent, Primary lenders are paid a commission.
Benefits to Primary Lender of selling your mortgages to the ECHMB
Long-term loans are immediately converted to cash. This would provide the funds for Primary Lender to originate more mortgages.
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To be an approved primary lender eligible to carry out mortgage business with ECHMB, lending institutions such as Commercial Banks, Development Banks, Insurance Companies, or Credit Unions, must conform with the underwriting standards and eligibility criteria as follows:
Capitalisation – The primary lender must be adequately capitalised. Capital adequacy shall be determined both in terms of an absolute amount of $3 million and a Capital to Asset Ratio of not less than 8% or leverage of 12.5 to 1.
The primary lender must be subject to regulations by an approved regulatory body.
Lenders require operational expertise and experience in loan underwriting and administration. The primary lender must have at least three years satisfactory experience.
The primary lender shall undertake a commitment to improve and maintain mortgage-underwriting standards via training.
The primary lender must agree to be submitted to periodic audits and reviews of its mortgage underwriting process.
The primary lender must maintain proper mortgage security documentation and also maintain a minimum delinquency ratio within its mortgage portfolio.