NEW VALUES.

Auckland Star, Volume LXIX, Issue 282, 29 November 1938, Page 11

NEW VALUES.

MORTGAGE LOANS. FARMS AND HOMES. WORK OF COMMISSIONS. REPORTS TO BE PREPARED. (No. I.) Members of the mortgage adjustment commissions have now virtually completed the big task of mortgage revision undertaken at the beginning of last year, and except in a small number of cases,, chiefly in the rural areas, the final orders have been made. Few orders will Ik? outstanding in Auckland city and suburbs after this week. The rural commissions should complete their sittings within a fortnight. Each of the commissions has been asked to prepare a report on the position as revealed during the revision, and these reports will probably be placed in the hands of the AttorneyGeneral, the Hon. H. G. R. Mason, before Christmas. "Members of the commissions have had an unique opportunity of acquiring a comprehensive knowledge of the economic and financial structure of the country, particularly nvith regard to farm and home finance," states a letter addressed to the commissions recently. "It seems desirable that as much as possible of this information should be placed on record. Therefore, each commission is asked to prepare a report on the working of the Mortgagors and Lessees Rehabilitation Act. in its district." Purposes of Act. This Act was intended, firstly, to retain mortgagors in the occupation of their homes or farms, secondly, to make euch an adjustment of their liabilities as would bring them within the value of the properties, and thirdly, to provide that the total amount and terms of payment of these liabilities, "after allowing for all normal current expenditure and providing for the maintenance of themselves and their families in a reasonable standard of comfort," would be adjusted so that mortgagors might reasonably be expected to meet their liabilities ae they became due, either out of their own moneys or by borrowing on reasonable terms. Similar provisions were made in regard to leasehold properties. From the outset every encouragement was given to the parties concerned in mortgage disputes to arrive at voluntary settlements, and large numbers of cases .were disposed of in this way, without being brought before the commissione. TJhue a spirit of compromise contributed substantially to the solution of the problem. ' State Advances. Owing to the extensive lending activities of the State Advances Department, now absorbed in the State Advances Corporation, the Government has been involved in a large number of the cases dealt with, and hae been a major loser in the writing down of £6,220,000 in mortgages throughout the Dominion. Many t of the loans made by the Department were up to 9,> per cent of the value of homes and farms, and when values contracted not only the occupier's equity, but also, in some instances, a considerable part of the value represented in the loan disappeared. The writing down has been much heavier on rural than on urban or suburban properties. People Given New Hope. "The revision has been most valuable in solving a pressing problem," said Mr. W. R. Tuck, chairman of one of the Auckland City adjustment commissions, this morning. "It is true to say that in 90 to 95 per cent of the cases the applications were made by mortgagors who had a genuine difficulty which needed an authoritative solution. It is also true that in these cases the mortgagees and other creditors met the difficulty in a spirit which showed their willingness* to contribute to a sane, just and permanent settlement. It was gratifying that throughout the sittings nearly all concerned helped to the best

Only in a small number of eases, he stated, had a hareh attitude been adopted by mortgagees, and few mortgagors had tried to take advantage of the opportunity presented to them. It was manifest again and again that applicants who had felt they were up against an impossible situation and had lost hope were given a new heart and a new purpose. The change in their outlook was immediate. From the renewal of steady payments under revised mortgage contracts benefits should result which would be shared all round. Deterioration Arrested. "What particularly impressed itself on the commissions," continued Mr. Tuck, "was that in the cases where eo many people had got into a hopelessly involved position the properties were rapidly deteriorating through lack of expenditure on maintenance and repairs. This wae very widespread in Auckland City and suburbs, and many of the orders, therefore, made provision for immediate expenditure to bring housee and other buildings into proper order. This represented an urgent move to recover the arrears of maintenance which had accumulated over several years." At the same time, he said, it could not be overlooked that the Act had created no equity for large numbers of mortgagors, and the properties under the adjustment were mortgaged "up to the hilt." The commissions had a clear direction in the legislation that where the amount of the principle money secured on any home or farm exceeded the value of the property—that ie, where the pro-

perty was over-mortgaged—the principle was to be written down to the presentday value. If values over the next few years were firm or advanced and incomes were maintained, there should be little cause for concern, and it was, therefore, to be hoped that no further decline occurred.

Table mortgages, he explained, were in a different class, as a margin was being created by the mortgagors as they went along. In this class were loans from the State Advances Corporation, some of the lending institutions in the city, and the building societies. In the same way mortgages which gave the borrower the option of repaying in small sums should also bring about a steady improvement. (To be continued.)