LOANS ON MORTGAGE

Manawatu Standard, Volume LVI, Issue 260, 1 October 1936, Page 8

LOANS ON MORTGAGE

CORPORATION’S ACTIVITIES. TERMS OF STATE TRANSFER. (By Telegraph.—Special to Standard.) ELLINGTON, Sept. 30. The change in control of the State Advances Department is covered by the report of tho State Advances Corporation, which was submitted to the House of Representatives by the Minister of Finance (Hon. W. Nash), today. It discloses the terms on which the Mortgage Corporation, which was established in July, 1935, took over the securities of the State Advances Department on July 31, comprising mortgage assets totalling £38,97i,812. At that date overdue instalments of principal amounted to £914,4* /. the interest overdue was £1,830,J90, while interest had been postponed to the extent of £44,559, and £106,493 had been erpended in tho protection of securities. The mortgages taken over were classified into two categories: (1) Mortgages in arrear, 20,736, the balance of principal outstanding being £17,932,589; and (2) mortgages paid up to date. 30,148, representing principal outstanding £18,498,801. With this information it was considered desirable by the Mortgage Corporation Board to make provision to the extent of £6,419,605, having regard to the estimated value of the securities owing to the fall in land values. This amount was regarded as a provision for contingencies rather than an estimate of the probable losses. The interest arrears were added to the contingency account, and it was finally agreed between the Minister of Finance and the corporation Hat stock to the. value of j.OOO should be issued the Minister at .uu ... merest rateof.l 3-8 per cent and the balance of £8,883,194 carried to the contingency liability account. . - '. During the corporation’s operations from September, 1935, to March 31, 1936, it granted 1859 loans totalling £2,635,065, of which 824 were farm loans totalling £1,87G,060. BETTER INTEREST PAYMENTS. The report states that ■ there has been a marked improvement in the last three years in the payment of interest, the receipts during the corporation’s eight months’ experience being 95.16 per cent of the amount due, compared with 79.48 per cent in 1933-34. The corporation, on March 31, had 3904 urban and suburban securities oil its hands, all but 31 vacant premises being occupied. The corporation’s accounts show gross revenue £1,165,262, from which is deducted £673,383 as interest on the stock issued to the Minister of Finance ; and the public management expenses, including £57,000 as provision for overdue interest, total £149,9"V, leaving a net profit of £341,996. Fr* 1 ’ the latter sum £105,000 is allocated to income tax, £9OOO in dividends to shareholders, and £IO,OOO to the investment fluctuation account, leaving £217,996, which is payable to the Crown virtually as a dividend on the contingent liability account.