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THE BELIZE TIMES
SSB Mortgages: No Free Dinner By Gwyneth Nah Belizeans have grown accustomed to not taking note of the important role and function of their Social Security Fund. The sentiment has always been that it is simply another government tax with some limited benefit to be derived from this fund over time. However, it is of utmost importance that Belizeans familiarize themselves with the purpose and functioning of the Social Security, as this Fund and how it is managed will determine the level of benefit Belizeans can expect over time and for many, when they need it the most. Over the past decade the Social Security Board (SSB) and its operations has always come under much scrutiny to the extent that a Senate Select Committee was convened in 2004 to review investment transactions that the SSB engaged in specifically related to the securitization transaction on mortgages during the period 2000 to 2004. Securitization, as an investment vehicle was so vehemently demonized in the eyes of Belizeans, with one of the leading cheerleaders being Mrs. Merlene Bailey Martinez, who chaired the DFC Commission of Enquiry. Now in 2012 the tables have turned so significantly that it is the same mortgages and former chair of a Commission of Enquiry now turned CEO of SSB that have been at the middle of reckless political patronage. For people to understand the extent of fiduciary negligence on the part of those responsible for the SSB, including the Prime Minister one must understand the history behind the mortgages and why this “free gift” is no real benefit to the people of Belize, but instead a great loss in the hands of those who will need it the most. The mortgages that SSB had in its investment portfolio at September 2011 had a total book value of $16M; which was spread across mortgages that were classified as securitized and un-securitized mortgages. The un-securitized mortgages consisted of loans that were issued by the PUP GOB back in 1999, that were sold to SSB. These mortgages were low to middle income homes that allowed working class Belizeans an opportunity to own their own home. The other segment of the un-securitized mortgages were for staff that worked at SSB and had left and those that are still employed and were granted staff loans for housing construction at a concessionary interest rate of 8%. This benefit to SSB staff prior to 2008 was managed by clear guidelines and procedures as to how SSB could access such loans. However, after February 2008 with the installation of a new CEO the process of loan approvals for staff was done at the whim and fancy of the CEO. The securitized portion of the mortgage portfolio on the other hand consists of loans that were originally issued by BIMCO, Saint James National Building Society, Belize National Building Society and some Government mort-
gages. In 2004 when the UDP opposition called for a Senate Select Committee to review the SSB mortgage securitization transactions it was brought to light that the securitization investment could have benefited from proper due diligence on the process. The then CEO Mrs. Narda Garcia was seen as the liable individual for the transactions. She however, got public vindication of any wrong-doing when the matter was heard before a court of law. Now 8 years later, under a UDP government not only was due diligence not completed on this blanket write-off but the CEO placed there as a steward of the people’s
money saw it fitting to increase her benefit package by $50,000. While mortgage securitization as a common investment option done all over the world which can yield positive results, was fervently condemned by the UDP, it has now done much worst by giving away the lot. In a reckless attempt to hoodwink the Belizean people a write-off of loans with principal balances of $50k and less was done. No criteria, no assessment, no due diligence. So irresponsible was this decision by the Prime Minister that even the CEO seemed to take advantage of the opportunity, no doubt with his knowledge and concurrence.
Sunday, February 5, 2012 Belizeans need to understand the real effect of this decision, while it may seem good for today, especially for the people who are feeling the pinch of high prices; the majority with pay for it later. In this sweetheart deal, the SSB fund got no cash transfer or booked no gains for these mortgages. So it is a significant financial loss to an already burdened social security fund. With no real investment having been done over the past 4 years, the SSB investment income has been on the decline. It is long-term investments that ensure that future pension payments can be made. Now where will those monies come from? Belizeans need to wake-up and understand there is no free dinner. Comments welcomed at GwynethNah@gmail.com
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