The Dominion FRIDAY, MARCH 20, 1931. MORTGAGORS RELIEF BILL

Dominion, Volume 24, Issue 149, 20 March 1931, Page 8

The Dominion FRIDAY, MARCH 20, 1931. MORTGAGORS RELIEF BILL

To protect mortgagors from exploitation made possible by the radical change in economic conditions, some provision such as that contained in the Mortgagors Relief Bill is probably necessary, it may be doubted, however, whether any but a small proportion ot mortgagees want to press their claims to the extremity of foreclosure. Most mortgagees do not want to enter into possession; many aie willing to accept revised terms and some are content in the meanwhile to receive nothing so long as their security is maintained. It should happen, therefore, that there will be no general recourse to the Courts as provided in the Bill, the chief value of which shou.d lie in its moral effect. Certainly something requires to be done where the creditor proves unconscionable and moves for the execution ot his full legal rights against a debtor who, through no fault of his own, has been left defenceless by the sudden turn of the economic wheel. In such attempts at exploitation, the fact that the mortgagees proceedings will be brought under public notice through the Courts must act very strongly as a deterrent. No one likes to be held up as a Shylock. But, if something requires to be done to guard against grasping mortgagees, Parliament must take great care not to overdo it. . The moral effect works in two ways. The other way is the psychologically damaging effect against mortgages as an investment if these contracts are to be subject periodically to legislative interference.. It is impossible to overlook the fact that for the second time, within 12 years the State has stepped in between debtor and creditor to the prejudice of the latter. Need it be wondered at if the mortgagee is thus made both shy and scarce and if, in the long run, the mortgagor suffers from the scarcity of money for this class of investment and has to pay higher rates for accommodation. There can be little doubt that this was the effect of the postwar moratorium and that the scarcity of, private mortgage moneys forced the State into the lending business bn an unprecedented scale. Certainly State advances to settlers and workers have increased enormously in the last ten years so that to-day the State is the largest mortgagee. Nor should it be forgotten that if general recourse is had to the legislation now before Parliament, the effect on the national finances may prove serious. The Government will still have to. pay its bondholders and, if its receipts from mortgagors decline considerably, will be forced, since the limit of taxation has been reached, to consider further economies. Here, then, is another reason for not opening too wide this door of relief for mortgagors. The Labour Party, always, free and irresponsible with other people’s concerns, showed a disposition when the Bill' was introduced to remove safeguards and widen its- scope. Labour members still cherish the old idea that the mortgagee is a wretched person worthy of no consideration, forgetting that- they and their supporters have a direct interest in thousands of mortgages. They also imagine that the Government has some horn.of plenty out of which largesse can be poured lavishly and without limit. But the capacity of the horn is strictly confined and, if less comes in from State mortgages, for instance, there will be less to come out for Public Service salaries. It will therefore avail little if over-generosity to one class involves parsimony to another. When the Mortgagors Relief Bill again comes before the House, it may be hoped that this wider and longer view will be taken. Regard should be had to something more than the immediate effect and members should be most chary of interfering beyond the barest minimum with the sensitive plant of mortgage credit. If a salutary moral effect can be obtained against the minority class of usurious creditor, the objective will have been gained. Parliament should not go further lest it intensify existing prejudices against mortgage securities, injure future borrowers, and make a rod for its own back. It can help the mortgagor in another way by insisting that the Government retire from borrowing on the local market at 5| per cent., a rate that sets a higher standard for every other class of borrower.