www.saipantribune.com/newsstory.aspx?cat=1&newsID=67556 -
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Last Visited: 4/17/2007
CDA acting chief executive officer Oscar Camacho said yesterday that based on the new relief program, CDA would take out the interest, set it aside, and allow the borrowers pay only the principal amount at a 2-percent interest rate.
"Say a borrower has a $500,000 loan with us, then the last time that loan was revised, the principal portion was only $380,000, so you have the $120,000 accrued interest.Now, the typical, conventional loan and the way it was practiced at CDA and other banks is you capitalize that accrued interested so the $120,000 plus the $380,000 becomes the new principal, then you start the new terms and then your new interest rate applies on the $500,000 loan.That's the traditional, conventional way.CDA has gone out of its way to take out the $120,000 accrued interest, set it aside so that it doesn't accrue interest, and the principal of $380,000 will be the one you have to pay with the 2-percent interest rate under a new term of the loan.It will accelerate the payment reduction on the principal portion while the accrued interest is still intact," said Camacho in an interview yesterday.
This arrangement is subject to review after every three years for a possible rate adjustment.
If the economy and the financial condition improves, the CDA would revise the program.Right now, Camacho said the goal is to help the borrowers come back to meet their obligations the easiest way.
Camacho said qualified borrowers can pay up to 30 years in cases where it would not lose its first lien on mortgaged property.