MORTGAGE CORPORATION

Nelson Evening Mail, Volume LXVI, 14 November 1934, Page 6

MORTGAGE CORPORATION

MINISTER PREPARING LEGISLATION SEEKING OPINIONS No time lias been lost by the Minister of Finance (the lit. lion. J. G. Coates) in commencing the work of preparing for the introduction in February next of tiie legislation providing for the establishment of the National Mortgage Corporation which was foreshadowed rn Mr Coates’s Budget. Preliminary discussions with those vitally concerned have already taken place! and it is anticipated (says “The Post”) that a draft of the Bill it is intended to introduce in February will be completed within a week. Circulars inviting expressions of opinion on the Government’s proposals will then be carefully considered by Mr Coates and those working with him. If necessary, they will be forwarded to Mr Coates in Australia so that the Minister may lie kept in close touch with the position. It is hoped that by the time Mr Coates returns from Australia the matter will he sufficiently far advanced to enable final conferences to be held. In this event the Government will have ample time to give Cabinet consideration to the final form of the legislation so as to permit of its being introduced as soon as the House resumes. INTENTIONS OUTLINED A brief outline of the Government’s intentions regarding the National Mortgage Corporation was given by Mr Coates in Ids Budget this year. “To bridge the gap between the stock exchanges and mortgagees, and thereby obtain finance at the lowest possible rates of interest, this corporation will he empowered to raise capital by the sale of mortgage bonds which have been issued against the assets of that branch of the Slate Advances Office,” he said. “Huge sums have been raised by the sale of such bonds on the stock exchanges of Europe and America. The underlying idea, of these bonds is to spread risks by making the bonds a charge over all mortgages held and to turn mortgages into readily saleable stock exchange securities representing small amounts.

“It is considered that the proposed corporation, if properly established under the control of a hoard that would command confidence, would he able to sell bonds at 4 per cent, or lower and generally he able to lend for repayment of existing mortgages at g per cent, above its borrowing rate. A great many mortgages are at present running on overdue, and in these cases refinancing could proceed without delay. Other Hat mortgages are falling clue from day to day, and the opportunity to refinance the hulk of them will occur within a few years. Present long-term mortgages hearing high rates of interest without a condition allowing repayment in a lump sum will present a difficulty that may have to he specially provided for.

“As it is clear that mortgages can he satisfactorily dealt with only individually on their merits, an essential requirement is an efficient field force to inspect and report upon properties and afterwards keep in touch with mortgagors. Operating on a large scale it will he practicable for tho corporation to maintain such, a force and keep it fully employed. “To save a costly duplication of machinery in this respect for reviewing the position of present State mortgages, and to obviate duplication and overlapping in other directions, the new organisation, under suitable financial arrangements with the Government, will take over the present investments of the State Advances Office, the Lands Department, and the Rural Intermediate Credit Board.”