Mortgage crisis in Puerto Rico

An average of 11 Puerto Ricans per day lose their homes for defaulting on their mortgages, an increasing problem on the island

An average of 11 Puerto Ricans per day lose their homes for defaulting on their mortgages, an increasing problem on the island, which for the past decade has been mired in a crisis that resulted in approving a law to allow affected homeowners to be helped by their relatives.

Calculations are that in the past five years more than 25,000 families have lost their homes on the island of 3.5 million residents, with 4,000 defaulting just in 2015, and that there are still 20,000 families who are three months or more behind on their mortgage payments, meaning that they are in danger of having the banks seize their homes.

The figures can be deduced from the documentation used to prepare a bill being debated on Tuesday in the local Senate to eliminate bank penalties for those who funnel funds from specific financial savings products to help their relatives make their mortgage payments.

"It's a small contribution in the search for solutions to a serious problem," said Sen. Angel Rodriguez Otero, the bill's author.

The measure would eliminate the current 10 percent penalty imposed on people who withdraw money from their IRAs before they turn 60, provided the money is used to pay a relative's home mortgage if the risk of non-payment exists.

The lawmaker said that although there is no information available on the number of IRAs in Puerto Rico, it is known that $2.8 billion is tied up in such accounts on the island.

He also said that this is just the first step toward finding a solution to the problem of lack of liquidity among Puerto Ricans in paying their mortgages, adding that in the coming months new initiatives will be proposed.

EFE

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