MORTGAGE LOANS.

Auckland Star, Volume LXIX, Issue 139, 15 June 1938, Page 8

MORTGAGE LOANS.

GOVERNMENT'S LOSS. PROGRESS OF REVISION. WRITING DOWN DEBTS. In an effort to complete the revision of mortgages in the Auckland district 1)v the end of the year, the Government now lias five commissions sot lip, three beiiic; engaged on disputes in the city and suburbs and two in the rural areas. As the Government is largely involved through the loans of the former State Advances Department, which have l>een taken over by the State Advances Corporation, it desires to have the position cleared up as quickly as possible. Since the task was begun early last year the number of eases for hearing by the city adjustment commissions has been reduced from 4437 to under 1500. Last month 280 cases were dealt with, and at the end of the month 1580 cases remained. By slightly increasing the rate of progress it is expected the work will be finished (luring November. In the rural districts, which extend to Warkworth, Wellsford. Mercer, Thames and Paeroa. one commission, with some assistance from commissions in adjoining districts, has reduced the original list from 4000 cases to 7.">0. As the work will now be shared by-a new commission set up this week progress should be fiiirly rapid, but it is doubtful whether the task can be disposed of before Christmas. State Advances Loan*. It is stated that the State Advances Department is involved as mortgagSS in about one-third of the urban and suburban cases which come before the commissions, and that the percentage in the rural areas is considerably higher. Among other lenders, in addition to private individuals, are city institutions, trustees in estates, building societies and the hanks.

"The State Advances Department, which made loans up to 05 per cent, has been a heavy sufferer," said a lawyer, who had been closely in touch with the position to-day. "The conservative institutions in the city, on the other hand, have ]o«t only negligible amounts." Recalling the recent statement of the Attorney-General that up to the end of April f4.000,000 has been written off under the Mortgagors and Lessees Rehabilitation Act. he said the adjustments made in tho Auckland district suggested that a substantial portion of this sum was represented in the writing down of State mortgages or the cancellation of State interest. He explained that the almost invariable practice, in adjusting State Advances loans, was to extend the term on a new table of payments, which depended on the nature and probable life of the security. Tables up to 35 years in length had been fixed on some sound farm properties. Concessions to Farmers. Writing off had been much heavier on farms than on urban or suburban securities, he continued. The commissions were usually guided, in dealing with farm properties, by the earning or productive capacity, and if a mortgagor had done his best to meet payments°of interest any arrears which bad accumulated were generally wiped out. In some instances this writing-off extended as far back as five or six years ago. but rarely did it exceed half the total interest. If no other course was open, arrears which t lie commissions were unwilling to write off were capitalised. Also it was a common practice to extend the terms of private loans. Neglectful Owners.

A method adopted in dealing with I people who had neglected tlu-ir properties sind were undeserving of consideration. it was stated, was to make an | order for transfer to the mortgagee; without payment of stamp dutv aml ""on the lowest scale of legal costs.' It was not uncommon to release the mortgagor, ill eUili cases, from accumulated liabilities. but sometimes an adjustment was necessary under which he was called upon to pay a *um in cash. Where a neglectful mortgagor could compensate a mortgagee for deterioration in the value of a property, without undue hardship, he was ordered to do so. but instances of the kind were not numerous. Money which has been prudentlv lent on first mortgage lias rarely been lost. ' said another authority, "but a portion of the interest may l>e cancelled when the cases enme before the commissions. The greatest writing-down has occurred in suburbs rated on the unimnroved value of land. In some of these di-tricts around Auckland lar'_re numbers of houses were built by workers who secured State loatv. When the depression came and many former owners lost . their jobs there was a good deal of buying and selling of these houses." An interest level around 4 to 4} per cent had been established hv the commissions. he concluded, and the position and liability of many guarantor* of mortgages had been cleared up. Women were often involved, either as mortcagFe.* or mortgagors, and in some instances the commissions were called upon to consider joint ownership or liability bv husbands land wives.