MORTGAGE FINANCE

Taranaki Daily News, 12 April 1935, Page 6

MORTGAGE FINANCE

LEGISLATION DISCUSSED. MR. WILKINSON’S OPINIONS. That a detailed statement showing exactly how the Acts would work would be prepared by the Government and presented to the public, was stated by Mr. C. A. Wilkinson, M.P., in speaking at Eltham on the mortgage relief legislation on Wednesday. He said Acts of Parliament were always subject to interpretation and it was possible that high legal costs might be incurred in determining the Act, but he hoped these would be reasonable. It had not been possible to get the Government to stand the costs.

In answer to a question,- Mr. Wilkinson said guarantors were protected in the same manner as mortgagors, and the court would decide how and when the guarantor had to pay. Mr. Wilkinson said he would strive to have long term mortgages to the Public Trust Office brought into line with the provisions of the Mortgage Adjustment Act.

Mr. A. McWilliam asked who would become the money-lenders of the country under the new system. Mr. Wilkinson considered it would be better for farmers to do with less borrowing. New Zealand land values had been built on a mild condition of slavery, and money had been borrowed on values so built up. Farmers should try to pay their debts and get the farms as their own. They should not rely on borrowing. This had been nothing short of a curse.

Mr. D. L. A. Astbury contended that the trouble was due largely to the buying and selling of land and asked if the Act' would cure this. Mr. Wilkinson said the Act would not do that. It did not touch the question of land being sold. He understood that land in Germany could not be sold at all, but must be handed down from father to son. The Act would not finally cure all the farmers’ difficulties. STATE ADVANCES OFFICE. Mr. W. P. Jenkins asked what was the position of the State Advances Office. Mr. Wilkinson said he opposed this being taken over by the Mortgage Corporation. He believed there would be a balance of mortgage value that would not be covered by the new mortgage, and he contended the State Office should be kept to look after that balance until it was washed out. The workers’ dwelling branch was not affected. \

Mr. W. Ricketts asked if a farmer would have to have a second mortgage to account for the difference between the 66 per cent, to be advanced and the full value of the security. Mr. Wilkinson believed this would probably be so. He said lower valuations would mean much lower advances.

Mr. J. J. Sulzberger asked the total amount of the advances by the State Office.

This was probably about £50,000,000 in both offices, replied Mr. Wilkinson. At one time the department would only advance a small proportion of the value of the land.

Mr. McWilliam questioned whether the owner of swamp land could get on without borrowing money for drainage operations. / Mr. Wilkinson admitted that it was necessary to borrow to a certain extent but said owners would have to borrow much less in future or they would not get protection for it.

Mr. McWilliam said he believed there might be much more in Mr. Wilkinson’s own scheme than met the eye, and it might be a better proposal.

i Mr. J. A. Rankin asked what benefit it would be to hand over the gilt-edged security to the Mortgage Corporation. Mr. Wilkinson ’ reiterated that he did not favour the Mortgage Corporation. Mr. Astbury considered that if something caused export values to rise land prices would go up and the whole trouble would occur again. MORTGAGE POSSIBILITY. Mr. Wilkinson agreed that it would be possible to mortgage up to the hilt again, but he urged that this was exactly what should not be done. His idea was that every man’s farm should be his home and should not be tossed about as a means of gambling. He had no sympathy with that. He pointed out that in New Zealand all stock exchange transactions had to be in cash, and this prevented the speculation failures such as occurred in America when the transactions were frequently on credit margins. In New Zealand they gambled in land. Mr. G. W. Peebles asked if it was possible to stop gambling in land while the present monetary system was in existence.

Mr. Wilkinson replied that the whole thing was based on a structure of credit. The question was who should issue and regulate this credit. They could not have this under the control of popular Government as this would be subject to pressure. He thought it should be in the hands of five men who were independent of this pressure and could resist it and act in an even way. He could not quite agree with the social credit proposals, and considered that the banking system of the British Empire had stood up to the test very well,

whereas the American banks had closed their doors by the thousand. Mr. B. H. Parker asked the position in regard to compensation to a mortgagor. Would his free assets go into the pool, and would these be given back at the end of the stay order period? IVIr. Wilkinson replied that the mortgagor’s assets would be lost and all he would get back would be an adjusted mortgage.

Mr. Julian pointed out that it was a great hardship to a man who had taken a second mortgage when values were high and expected to live on this when he went to town to retire. Mr. Wilkinson admitted this was so, but contended it was harder still on the man who was left on the land. He favoured' some other way of providing for old age.

Mr. J. Cocker asked if capital repayments under an amortisation plan would be suspended, and Mr. Wilkinson replied that he thought these would have to be waived until living and working expenses were taken out. This was an entirely new principle, that living expenses were to be a first charge. Hitherto interest had priority. Mr.-Astbury: Will not the Act provide a happy hunting ground for lawyers?

Mr. Wilkinson: Possibly it will. Mr. H. B. Gibson considered that it was a good idea to appoint the mortgagee as trustee. After he had been runijng the farm for five years he would know the value of the farm and what it could produce. Mr. Wilkinson: Exactly. The budgetary period will determine the value of the farm. Parliament did this work for the farmers and did it very well, said Mr. Wilkinson. It was up to the farmers to try to make the Act work, and the country should benefit by what was done.