MORTGAGE RELIEF

Timaru Herald, Volume CXL, Issue 20260, 8 November 1935, Page 5

MORTGAGE RELIEF

STATE METHODS OF ADJUSTMENT ANNOUNCEMENT BY MR COATES “When the Rural Mortgagors Pinal Adjustment Act was passed,” says the Rt. Hon. J. G. Coates, (Minister of Finance in a statement, “it was the intention of the Government to encourage voluntary adjustments of the excessive liabilities of farmer mortgagors. In pursuance of this policy the Government have indicated State lending Departments and the Mortgage Corporation (acting as agent for the Government) the desire of the Government to make voluntary adjustments wherever this is reasonable and practicable, and a procedure has now been worked out which it is hoped will facilitate this process. Voluntary Adjustments Preferred “Wherever it appears reasonable that some adjustment in liabilities should be made, the Government is anxious to avoid resort to compulsory provisions of the Act, and in particular to remove the necessity for the use of the Stay Order and budgetary control. This should be possible in most cases where the State is the only mortgagee. Where private mortgagees are also involved, the position is more difficult since the State can hardly be expected to make concessions for the benefit of subsequent mortgagees, without any substantial benefit accruing to the mortgagor. In such cases every effort will be made to encourage private mortgagees to cooperate in making adjustments as will enable the farmer to carry on. Since the Government are trustees of the assets of the State on behalf of the people of New Zealand, every care must be taken to ensure that adjustments of liabilities are warranted by the circumstances of each individual case. The basis of voluntaty adjustment should be such as will give the competent mortgagor a chance of making a success of his farm undertaking, while at the same time safeguarding as far as possible the assets of State Departments. Direct Negotiation “Attention has been drawn to the fact that some State mortgagors are reluctant to make application to the Adjustment Commissions for a voluntary adjustment, because they fear that they may be placed under a Stay Order and they prefer to remain under the protection of the Mortgagors and Tenants Relief legislation. In order to overcome this difficulty, it is proposed that where the State Department is the only mortgagee, voluntary adjustment may be made by direct negotiation. A formal application will then be made to the Adjustment Commission for approval (after the voluntary agreement has been reached) of a voluntary adjustment under the Act.

Methods of Valuation “The valuation proposed will be such as to ensure the farmer of average competence a reasonable opportunity of carrying on farming operations with success. Some measures of uniformity in the principles adopted will be necessary, but sufficient elasticity must be provided to take account of the individual circumstances affecting each case. The value of the property will be such as practical men would consider fair under existing conditions. The procedure proposed is as follows: When an application for voluntary adjustment is received, the District Revaluation Committee will make a valuation in conformity with the above principles and this, together with all other available information relating to the property, will be considered by the Central Revaluation Board. District Revaluation Committees, acting through the responsible District Officer, will, however, be given certain discretionary powers to authorise adjustments. Alternative Offers When, having regard to all circumstances of each individual case, a reasonable basis of adjustment has been arrived at, the farmer will be offered the following alternatives: Either—(l) To accept a final adjustment, to the level proposed at once together with: (a) Such reduction of interest as may be necessary for a stated period, say three or five years, and (b) where necessary, the cancellation of arrears of interest; or—(2) Have a provisional adjustment to the level proposed, the final adjustment to be made in five year’s time. This final adjustment would involve a variation upwards or downwards in proportion to the rise or fall in average prices of the products during the period of five years, by comparison with the average prices used as the basis of valuation. In addition, the same provisions would apply in respect of reduction of interests and cancellation of arrears as under No. (1); or—(3) He may apply to the Court which may make an immediate adjustment if in its opinion this is desirable and practicable, or otherwise exercise the powers under the Act. “If the farmer accepts neither alternative. he will still be able to apply to the Court for an immediate adjustment. In cases where the farmer is placed under a Stay Order, the Government are prepared to abide by the provision in the original Bill, that the Court may at its discretion grant the farmer an equity of up to 20 per cent, of the basic value.