Mortgage Finance

Hawke's Bay Tribune, Volume XXVI, Issue 144, 3 June 1936, Page 9

Mortgage Finance

STATE ADVANCES House Discusses Bill in Committee THE HOUSING SCHEME By Telegraph—Press Association WELLINGTON, June 2. Urgency c was accorded the passing of the State Advances Corporation Bill, which was considered in committee in the House of Representatives to-night. Speaking on the short title, Mr W. A. Bodkin (Nat., Central Otago) said that before the Government could justify the Bill it must prove that the Mortgage Corporation had failed in its duty to the country; but the Minister, Mr Nash, had paid a tribute to the Mortgage Corporation and its work, and therefore he must find some other ground than its failure to find cheap money for the farmer.

Ho knew it was claimed that the State could borrow at a cheaper rate than a private institution, but he would remind the Government that the State could only borrow at market rates. He contended that loans should be restricted to farmers and workers and that they should be given only on strictly business lines. Ho predicted that heavy losses would bo incurred, and that that would be injurious to the State’s credit. Ho characterised as dangerous the proposal to lend money to industries, as only those industries which could not obtain money from other sources would borrow from the State. Mr T. H. McCombs (Govt., Lyttelton) claimed that the Bill provided for the complete economic rehabilitation of the country.

Mr W. P. Endean (Nat., Parnell) said that the Bill was one further step towards socialisation. The Bill was inconsistent with the British character. It made the Minister uncontrolled dictator of the State Advances Department. He added that if anything went wrong the burden would fall on the Consolidated Fund. Ho suggested that the bondholder should have been left to carry the burden of any loss incurred. THE PERSONAL COVENANT. Mr Endean asked the Minister if he intended to abolish the personal covenant. Mr W. T. Anderton (Lab., Edon), said that no-one would deny that there was a house shortage in the Dominion to-day. The Bill would enable the Government to provide money to build houses for the people. Mr S. G. Smith (Nat., New Plymouth) said that there was nothing definite in the Bill to assist 'he farmer, and there was only talk of finding money for industry after investigation by a body to be set up. He asked if the Minister, in taking over the administration of the Housing Act. would look into the position of those persons who had taken up bouses under that Act and who had paid high rates of interest for a number of years. The Hon. W. Nash. Minister ot Finance, said that the Bill was not like the Housing Act of 1919, and although it took over all the powers of that Bill they would be administered in a totally different way. All the powers in that and the subsequent Act would be used I to see that houses would bo built for i people who required them, and at a cost within tlio reach of their incomes. Farmers would be given money at rates they would >e able to pay, and local authorities, who would co-operate with the Government, would be given money to enable them to do it.

MINISTER ON HOUSING. I Ho was not anxious to prove Hint the ' Mortgage Corpornt’oi had failed, but he did know that the Dominion was short of houses to the extent of 16.00'1 to ‘lO,OOO houses. The Mortgage Cor porntion could not provide tin money to build tin sc houses. The Kt Hou. J. G. Coates asked the Minister what was going to be the Government’s attitude towards arrears on State Advances h ruses. He agreed that money lent for the development of

farms or industries should be at market rates, but when they came to houses, then that was a different matter, as it was a social service and houses should be provided even if it meant a loss. Slum houses should be replaced, by decent houses.

He urged the Government not to abandon the idea of tenement houses under modern conditions at a cheap rent. If single houses were built it would mean going farther out into the country and adding to workers' costs. The Government should keep in mind the necessity of raising the country’s credit so that overseas loans could be converted at the lowest possible rate. He thought it was wrong in policy to give a State guarantee to corporation bonds. He objected entirely to the State’s becoming a shareholder in industry.

Mr R. A. Wright (Independent, Wellington Suburbs) criticised the suggestion that a borrower should take out a life-insurance policy to cover his loan. Mr Nash, in replying to further arguments, said that Interest would be at the lowest possible rate that should be made available. He defended the life-insurance proposal and said that in the event of p borrower passing away his house in Its entirety would be free for his widow. The cost of the policy would depend on the age of the borrower. The net cost to a man of 30 for a loan of £lOOO would be £3 7/8, and for a man of 40 £5 15/10. A scheme such as that proposed could only be done by taking risks, but the risks would be carefully watched, and if it meant taking risks those risks would be taken to give the people decent homes. Regarding arrears of rates, why should the present Government take th- responsibility for itl

Mr Bodkin said it was ludicrous to suggest that insurance would cover anybody for £lOOO on the premium mentioned by Mr Nash unless the Government Insurance Department was writing n special policy. Mr Nash said it was not intended that insurance coverage should be given for £3 7/8. What he meant was that coverage would be given for £3 7/8 over and above the sum that would normally be paid for a table mortgage. Several clauses were challenged but "ere passed. Progress was reported and the House rose just before 1 a.m. PROPOSED AMENDMENTS. Amendments which are to be moved by the Minister of Finance, the Hon. W. Nash, during the committee stages were circulated m the House of Representatives to-night

Originally the Bill provided tor payment to shareholders according to the amount paid up on tljetr shares on June 14, although in the following subsection it was stated that the premium would be computed on the amount paid up as on May 27, the date on which the Bill was introduced Amendments provide for calculations as to repayment to be made on the amount paid up as at May 27. A new clause makes special provision with respect to mortgagees of leasehold interests. Where any loan grant, ed by the corporation, whether before or after the commencement of the new legislation, is secured vholly or in part by a mortgage of leasehold interest in land, the mortgage will include mortgagor's iiiteicst in any lease that may subsequently b e granted to biin in renewal of the mortgaged lease or in any other way . The necessity toi the consent of tlie hoard of management of the corporation to the sale of any dwelling undei the Housing Act is stipulated in nn other new clause. It is stated that m> worker’s dwelling is to be disposed ol by a purchaser in any wav except with the consent of the board which, without the approval of the Minister ol Finance, will not ho given. In any case where -the purchaser is not qualified to acquire a worker's dwelling under tbo Housing Act, 1919, provision is made for endorsements of certificates of title when .-ales are made.