Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, AUG. 27, 1936. MORTGAGE ADJUSTMENT

Poverty Bay Herald, Volume LXIII, Issue 19104, 27 August 1936, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, AUG. 27, 1936. MORTGAGE ADJUSTMENT

The Government's proposals for dealing "finally and for all time" with the vexed problem of mortgage adjustment are contained in the bill that has now been presented lo Parliament. The long delay in framing the measure is explained by its complicated nature and by the evident desire of the Government to create the impression, by a mass of verbiage, that it was really accomplishing something worth while. A careful analysis of the bill, however, fails to disclose that it has accomplished anything more than had been achieved by the steps previously taken to overcome cases of hardship, and there are some respects, at least, in which the existing legislation possesses undoubted advantages over that now proposed. The predominating feature of the measure is that the greatest relief will be felt, not by the mortgagor, who had visions of being relieved of some of his liabilities, but by the mortgagee who had feared that drastic steps might be taken to deprive him of a portion of his investments. Actually, nothing of the sort has been attempted, and the bill goes no further than its predecessor in attempting to facilitate adjustments as between mortgagee and mortgagor on the basis of present-day values. There is t,o be no wholesale writing down of indebtedness, but every case is to be investigated and dealt with on its merits after full consideration has boon given lo the position of the respective parties. In ordinary circumstances —and, when all is said and done, legislation should be considered in relation to its general effect rather than to exceptional cases—there will be no actual relief from the present liabilities. To quote the Minister of Finance, "the general purpose of the bill ... is to ensure that the liabilities secured on any property do not exceed the value of that property.'' This assumes that difficulties have been caused through properties being mortgaged beyond their full value,'but the number of such cases must miTely be few and far between. Where excessive advances have been made the lenders have not been large institutions or wealthy individuals, but have been confined mainly to State departments, buildinig societies who have lent to their own members, or in-

dividual* with small capital who have been-prepared to tak* greater risks in an attempt to supplement their incomes. It i« those sections of the community, therefore, who would be penalised by any scheme which had the effect of writing down mortgages. fmlerest in the bill will centre chiefly round the provisions for dealing with farm lands, and, particularly, the ease of dairy fanners who were led to believe that the Mortgage Bill would provide some compensation 1 i'or the disappointing level of the guaranteed price. It is safe to say that the aver age dairy farmer will not save one penny as a result of the Government's measure. If he had a genuine case for relief from mortgage liabilities it is certain that he would have taken steps to secure it under the old legislation, and his prospects of success would have been greater when the value of his produce was a good deal lower than i.t is to-day. In most cases, adjustments already have been made, often a*s a result of long and tedious negotiations, and the position of the farmer, in consequence, hasbeen greatly improved. Apparently it is the intention, of the Government to cancel all these agreements and to start again ne novo, compelling th< parties to reopen all the old discus pious and controversies and seek o hiow basis upon which to work. How. then, can the mortgagee expect to benefit in any way, since any new ad justment must be on the basis of higher values? The position of Oithei producers will not differ greatly from (hat of the dairy-farmer, except, perhaps, that a new basis has been created for assessing the real value of mortgages. Under the existing legislation a mortgagee's liabilities are assessed, primarily, according to his ability to pay. Obviously, no basis could be more fair or equitable. but this system is to be replaced by a complicated and difficult one based on the prices of farm products ovei the past eight or ten years. The guaranteed price for dairy produce gave some idea of the difficulty of. assessing values over a period of years, but the work in that connection was simple compared with what it will be in the case of farm produce generally, and, in particular, in the ease; of mixed farms, or those that have changed from dairying to sheep, or vice versa. And, then, whew this tangle has been unravelled, if, indeed, it ever is, it may easily prove to be the ease that the farmer is not in a position to meet the charges whicli have been assessed against him. Considering the bill as a whole, it is difficult to see what benefits are conferred on mortgagors at all; on the contrary, it would seem that they stand to lose a great deal and to gain nothing. So far as mortgages on other than farm properties are concerned, there do not appear to be any real concessions except in cases where money has been advanced in excess of the value of the security, and these cases are so exceptional as to be not worthy of consideration. But if the unfortunate mortgagor who is in difficulties does not receive relief under the bill the same cannot be said for the wealthy individual who has capital at his disposal. A mortgagor may have entered into a contract to pay a fixed rate of interest for a period of twenty or thirty years; but if he be able to pay off his liability or refinance it, ho can demand a reduction of his interest, notwithstanding his contract. If, on ttie other hand, his interest is a real burden and he cannot refinance' he is denied relief. The whole bill, indeed, is charged with complications and anomalies. It grants no relief other than that which was previously available, and in some instances may actually make conditions more difficult for the mortgagors for whose benefit it was introduced. Above all else, it disturbs, and may completely upset, agreements that have been negotiated and endorsed by a judicial authority and which, on the whole, have worked with the greatest satisfaction to both parties. Clearly, the measure requires far move justification than that supplied in the Minister's introductory statement, and unless there are features ix the bill that remain undisclosed the Government could not do better than withdraw it and candidly admit that the problem is no difficult that it cannot improve on the existing legislation.