Housing Corp. rescues 50 in cash problems

Press, 14 September 1988, Page 50

Housing Corp. rescues 50 in cash problems

PA Wellington The Housing Corporation has had to rescue 50 people in the last 12 months who got themselves into financial problems, Parliament’s Social Services Select Committee was told yesterday. The corporation’s acting director-general, Mr Don Cattanach, told the committee that the problems arose over car loans which people could not repay. Mr Cattanach said the usual scenario saw a person buying a car without a deposit on a special loan that had penalty payments if the borrower got behind

with repayments. When people got behind, often by only a few weeks, the penalty payments made the situation worse.

People then usually sold their cars cheaply to try to repay what they owed. They were still usually in debt to the finance company after that and because they used their house as security for the original loan,- mortgagee sales were forced on them. Mr Cattanach said the corporation was usually called in to help only 24 hours before a sale was to proceed, once the owner

realised the house would be lost. The corporation paid off the debt and, in most cases, charged the person in trouble market rates. Although the corporation was involved in about 23,000 loans a year and 50 such cases was not much in that context, it was still a serious situation. The problem was particularly bad in Auckland where such car loans were readily available. It was better for the corporation to step in to help than to have to find housing for a family after they had lost their home.