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HMB shifts to secondary mortgages

Published: 
Friday, April 13, 2018

Home Mortgage Bank (HMB) has realigned its business in keeping with its original mandate “to facilitate the growth and development of the housing finance market by the maintenance of a secondary mortgage market funded by capital market activities.”

Its vision is “to be the leading secondary mortgage institution in the local environment with the objective of creating liquidity in that market while providing financial returns comparable to those obtained by the shareholder on its other investments.”

The bank continues to play a pivotal role as outlined in its mandate to:

• develop and maintain a secondary mortgage market in T&T

• contribute to the mobilisation of long-term savings for investment in housing

• support the development of a system of housing finance and provide leadership in the housing and home finance industry

• promote the growth of the capital market

Since its inception, HMB has made a significant contribution in its role as a secondary mortgage institution having acquired $4.3 billion in mortgages thus making available that sum to home owners at affordable rates. To date, the bank has mobilised $5.7 billion in long-term savings for investment in housing and in so doing, provided leadership in the housing and home finance industry.

In the execution of its mandate, HMBk pursued growth through its secondary mortgage market operations, the origination of primary residential mortgages and maintained its presence as an issuer of debt securities and mortgage-backed securities in the capital market. In charting its strategic direction for the period 2017 to 2020, the Home Mortgage Bank re-examined its mandate in respect of the development of a system of housing finance and in particular, its role in support of the Government’s housing policy.

Government’s housing policy is founded on the need for shelter for lower and middle-income families. While some progress has been made in this regard, it is not without some strain on its technical and financial resources. In the National Budget 2010 - 2011, Minister of Finance Colm Imbert articulated the intent to consolidate the Government’s mortgage interests through the restructure of HMB and the T&T Mortgage Finance Company Limited (TTMF). The consolidation would serve to provide sustainable funding to the housing sector through these institutions by way of affordable mortgage financing and to fund the construction of homes by the Ministry of Housing and Urban Development through its various housing agencies.

Since the Minister’s announcement, The National Insurance Board of T&T (NIBTT) has acquired 100 per cent shareholding in the HMB and continues to own 51 per cent of TTMF. The NIBTT has undertaken to rationalise its holdings in the two companies, in order to ensure that the maximisation of returns is in the best interest of the National Insurance programme.

HMB will be refocusing its operations on the expansion of the secondary mortgage market, while providing the necessary funding to TTMF to expand its primary portfolios.

To this end HMB, will be exiting the primary residential mortgage space, which is well served by TTMF and will provide financing facilities for land development and commercial projects, including multi-family units. This change will be effective April 16 at which time HMB will discontinue underwriting any new primary mortgages but will continue to service all existing primary mortgage clients.

HMB will introduce developer financing in support of the Government’s Public Private Partnership for the expansion of the housing stock. In its role as a developer of the capital market it will maintain its presence in the debt and investment securities markets through the development of additional mortgage-backed securities for sale to investors.

As a precursor to the restructure, through their joint chairman, Ansel Howell, HMB and TTMF will be collaborating to optimise the inherent synergies from a close corporate alliance whilst maintaining the independence and integrity of both companies. Discussions continue with the NIBTT, the Ministry of Finance and other key stakeholders on fulfilling the primary mandate of integrating the activities of these two entities to maximise returns.

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