STATE ADVANCES CORP.

Greymouth Evening Star, 12 August 1936, Page 14

STATE ADVANCES CORP.

DETAILS OF POLICY

[ I'ER CRESS ASSOCIATION.]

WELLINGTON, August 11. Full details of the policy oi the Government in its administration of the State Advances Corporation were announced to-night in a statement by the Minister for Finance, the Hon. W. Nash. "The Board of Management t.f the Corporation will be responsible for the administration of both ordinary investment loans and special loans authorised by this years Act.” said Mr Nash. “The Board will continue its ordinary business operations of lending for such purposes as it deems proper on its usual investment basis under this heading. There is no restriction on the amount of a loan or purpose for which it is raised, but the corporation is restricted by the Act to granting loans up to a limit of two-thirds of the productive value of the security as assessed by the Board. However, the Board will also make advances beyond this margin in proper cases. Such loans will be mainly for the rehabilitation of farmers and the building of homes. They are to be termed special loans. In cases where persons are willing and able to pay some reasonably substantial deposit toward the cost of building a home the Government proposes to find the balance at as low a rate of interest and with as small a margin as are reasonable. That statement. embraces the position generally where persons applying for special building loans are able to satisfy the Corporation that they, as mortgagors, will have reasonable equity in their homes. “It seems to the Government that lor the present special building loans should be made available to assist families where the joint income of the husband and wife does not exceed' <£6 a week. However, some reasonable allowance to this limit will be made to meet different circumstances and responsibilities of households. The Board will lake the circumstances of each ease into consideration, and where a family exceeds three dependant children additional income earnings will be allowed for as appear reasonable. The Board will give similar consideration to the amount of the loan that may be borrowed in any of the special building cases and to the best terms that can be offered by the Corporation to the particular applicant so as to bring the amount of the instalment to a figure that will net absorb more than a reasonable portion of the borrower’s weekly wage or income.

“This general aim can only be attained by bearing in mind three considerations—the amount of the loan, the term over which repayment is to be made, and the annual income of the applicant. The Board will have to guard against encouraging any borrower to assume a burden beyond his earnings, having regard in each case to family responsibilities. In some cases a building loan of up to £lOOO for a home and section may be warranted and perhaps something higher in particular cases where there are four or more children dependant on their parents in applications for special building loans. The Board will then give in each case its special consideration to the following factors: —The character and' general circumstances of the applicant, the necessity for a new house in a particular area, the income of the applicant, and allied to that the amount of the loan liability that can reason ably be carried by him in his circumstances.

TABLE MORTGAGES. “This year’s Act contains certain special provisions directed to better service and assistance for the mortgagor. I refer to the provisions for variation of the scheme of table mortgages, the conditions of accepting a life insurance policy as colateral security, and to the special class of policy covering the reducing balance of a loan, to the provision for periodical payments on account of rates, insurance, and maintenance of security, to different rates of interest that may be charged in respect of different portions of the same loan. These matters will be considered by the Board in relation to each case submitted to it." “Unless the applicant is proposing to build a home for continued occupation by his family, he will not be eligible for a special building loan from the Corporation. The Corporation will exercise its statutory powers to limit the possibilities of abuse of State benefits. With this knowledge no buyer can negotiate to purchase any security mortgaged to the Corporation in the belief that he is buying, in addition to property, exceptional finance facilities. The Government is desirous of assisting people to build homes in those places where the need for new homes is at present acute. The housing shortage is widely spread, yet there will be districts in the Dominion where the present shortage does not exist. In such cases the proper administrative outlook would be to assist in home purchase rather than in erection of new houses. The Corporation has concluded arrangements with the New Zealand Instiute of Architects, whereby -the services of architects selected by the Corporation will be available in different centres for examination of plans and specifications and general supervision of buildings in course of construction. Special fees have been agreed to by the institute in recognition of the element of social service involved in the programme. General planning features will not be overlooked, and arrangements made will provide a proper check over building tenders. HOUSING ASSISTANCE. “I desire to draw public attention to the housing policy of the Governiment as the advancing of money by the Corporation for the building of homes, and the building of homes by the Government are closely related. There are people who because of the circumstances in which they earn their livelihood’ or for some other good reason, are unable to find a reasonable proportion of the cost of a section and a home. The Governmental an early date will commence building houses for renting to such people at a figure that will be in keeping with their incomes. Although these houses may not he purchased from the Government, the tenant Mil be assured of

permanency of occupation so long as he meets his obligations. The administration of these houses will .be in the hands of the Corporation, and, with this purpose in view, the Corporation has established a ‘central record’ for names of people, including those applicants for special building loans, who have not been successful in their loan applications, so that data may be readily available from which selections may be made of occupants for new houses. People desirous of having their names listed in this record’ should obtain the form of personal particulars supplied by the Corporation to all post offices. The completed form should be posted to the manager of the Corporation. in Wellington, together with a covering letter stating the requirements. “The special loan procedure may also be adopted by the Corporation for the purchase of existing dwellings. These loans will be considered by the Corporation in special cases, but as a general rule they’ will not be available where a proposed' purchase involves the disturbance of an existing tenancy. This means that, as the provision is intended to secure a home for the applicant, the dwelling must be vacant and ready for his occupation. The condition of improvements and the age of the building will be factors for the consideration of the Board of Management of the Corporation. In general, the considerations that will be applied to special building loans will be equally applicable to special loans for the purchase of existing dwellings.

LOANS TO FARMERS. “I have stated that one of the purposes of the State Advances Corporation Act, 1936, was to provide money for rehabilitating farmers. Special loans will in proper cases be available for this purpose, and’ consideration will he given in all cases where there is a case for an advance in excess of the usual 66 2-3 margin, provided that the earning capacity of the land in the opinion of the Board of Management so warrants. The Corporation is now organising its field staff, and the facilities of the Corporation will be operated in conjunction with the Government’s proposals for the relief of mortgagors. The same guiding principles will be applied by the Corporation where special loans are granted, whether the special loan is for building a home aor rehabilitating a farm. If the Government provides money for any farmer it will be to help that farmer to stay on his farm and to obtain the best results from his land. It will not be to enable the farmer to sell his farm. The State Advances Corporation is now sufficiently advanced in its arrangements to enable applications for these special loans to be dealt with. The post offices throughout the Dominion have been supplied by the Corporation with forms of. application, 'pamphlets and personal circumstances forms for the convenience of enquirers. In addition, the Corporation is represented in many towns throughout the Dominion and by its branch offiecs in Auckland, Wellington, and Christchurch. These agencies and branches will be of assistance in affording advice to intending applicants from the Corporation. In many cases both of farmers and home-owners it will not be possible to effect any improvement in the position of the mortgagor merely by refinancing. It is the intention of the Government shortly to introduce its proposals for legislation to enable the rehabilitation of mortgagors. It is recognised on all sides that the legislation of 1931 and 1933 was in effect a moratorium —only a postponement of the day of enforcement or adjustment. It is the considered opinion of the Government that the enforcement of mortgage claims would at this stage create desperate hardship and that the proper course to pursue is by way of adjustment under the existing legislation. The final adjustment is limited to rural mortgagors, and they must endure a stay order for five years before qualifying. Other classes of mortgagors and lessees are omitted from the 1934-35 Act. It is now intended' that all qualified classes of mortgagors and lessees shall be entitled to an immediate adjustment based on the present-day value of the security. The mortgagee will be secured for every part of his loan that is sustained by that value, and disposal of the balance will depend on the circumstances of the applicant. After the adjustment every qualified farmer, home-owner, and other applicant will be able to work his farm and enjoy his home fre from an intolerable burden of debt that could never be paid and released from the constant fear of dispossession.