ALTERNATIVE PROPOSALS

Evening Star, Issue 21945, 4 February 1935, Page 7

ALTERNATIVE PROPOSALS

PRIVATE MORTGAGE SETTLEMENTS IN TRAIN r AMALGAMATION OF STATE LENDING DEPARTMENTS The committee is of opinion that under existing legislation, the difficulties between private mortgagees and their mortgagors are in course of settlement. Although in many cases these settlements are stated to be temporary only, the committee believes that final settlement will in due course eventuate on the lines of, and as an outcome of, temporary settlement. The position between the State and its mortgagors is entirely different, and! the committee therefore thinks that private mortgages and _ State mortgages should be dealt with separately as under:—

1. To secure uniformity of administration, eliminate inter-departmental competition, and also to eliminate political interference (if that be possible), the committee suggests the amalgamation of the mortgage lending activities of the various departments, and the control of those activities by an independent board. 2. In view of the large sums involved, the committee is of the opinion, that the best results would be obtained if more than one board were created. For this purpose the dominion might be divided into districts, each with its own board, the districts being so arranged that each hoard would have approximately the same amount of mortgages under its control.

To secure uniformity, the chairman, of all the boards should form an advisory committee for the whole scheme. 3. If the principle of this suggestion be accepted there will he no necessity for the elaborate process of the new; board taking over mortgages and issuing debentures. The boards should administer the existing mortgages, answering to the respective departments in the same way as the Public Trustee handles his mortgage investments which, are outside the" Common Fund.

4. With regard to new. business, the committee contemplates that a department having funds for investment on mortgage would invest through the boards —the department not coming into contact in any way with any prospective borrower. 5. The foregoing suggestions are in such form that all departmental mortgages can be taken over. 6. The hoards should be giveri full powers (comparable with those possessed by individual mortgagees) of varying mortgage contracts by mutual arrangement with the respective mortgagors. 7. In these proposals the committee contemplates achieving the same result as is mentioned in Mr Coates’s pamphlet. The Minister’s proposal was that the bonds allotted to the State would bo sold and the proceeds used to repay the' loans raised, for instance, by the State Advances Department. The committee contemplates that, the repayments of principal received by the boards in respect of State advances mortgages would be applied in repaying the loans; raised by that department. so.that eventually .this liability would he extinguished. On the other hand, other departments are, and will he, continuing concerns, and will have from time to time further funds for investment. PRIVATE MORTGAGES. The committee has already expressed the opinion that necessary adjustment* between private mortgagees and their mortgagors are proceeding satisfactorily under existing machinery. All that :• necessary to complete -"the programme of adjustment is .some* modification' of the existing machinery. The committed sets this out later in dealing with th« rehabilitation proposals.

The committee is satisfied that there is ample finance available at cheap rates to effect the refinancing of existing mortgages as and when this becomes necessary and advisable. If it should be found that there are insufficient facilities at present for long-term lending on a table basis, the committee considers the proper course is to encourage the formation of new private institutions of modest size on a district basis and free of governmental control.

The committee will be glad, if the Government so wishes, to_ submit proposals in detail for legislation having as its object the encouragement of such institutions. The committee appreciates the fact that there are certain disadvantages attaching to the formation* under the Companies Act, 1933, of institutions such as it contemplates, and that some enabling legislation will be necessary, in this connection.