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Aug 27, 2004

Figures reconciled in Fonseca/Elrington dispute

Ralph Fonseca said he had a mortgage of seven hundred and sixty-three thousand dollars and the following night Wilfred Elrington appeared on News 5 to deny it, saying that the amount of his loan from St. James National Building Society was under two hundred and seventy-five thousand. So who got it wrong? No one, actually. It all depends on how you interpret the figures. What Minister of Investment Fonseca says he was referring to was the amount securitized. That is, when loans are bundled and sold, what is being purchased is the entire income stream from those loans: the principal plus the interest over the debt’s entire life. That amount, depending on the interest rate and repayment schedule, is often far in excess of the original amount of the loan. So, while Elrington indeed has a mortgage of under two hundred and seventy-five thousand dollars, the purchaser of the loan is looking for a total return of seven hundred, sixty-three thousand. In related news, we neglected to mention in our report last night that in addition to its guarantees and millions of dollars in bad loans to DFC and various private borrowers, the Social Security Board has also invested in land, the most recent purchase being two thousand acres on the west side of Ambergris Caye, bought from Government for seven million dollars. SSB general manager Narda Garcia told the press that the board had not yet decided what would be done with their latest acquisition.

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