FARM MORTGAGES

Wairarapa Age, 13 March 1935, Page 5

FARM MORTGAGES

REHABILITATION BILL BEFORE HOUSE. OUTLINE OF GOVERNMENT’S PROPOSALS. ADJUSTMENT BY COMMISSIONS AND COURT. (By Telegraph.—" The Age” Special.) WELLINGTON, March 12. ‘‘The general purpose of this Act is to retain efficient farmers in the use and occupation oi their farms, and to make provision for an adjustment of all their liabilities." This is how the objective of the Rural Mortgagors Final Adjustment Bill is defined, and it is proposed that it operate from May 1 next. There are 73 clauses, the Bill being divided into seven parts. It constitutes a Court of Review comprising a Judge and two other members, this being a Court of Appeal from the Mortgage Adjustment Commissions. The measure, which exactly follows the principles indicated in the Finance Minister’s mortgage pamphlet, contains twelve clauses dealing with the procedure for voluntary settlements between mortgagees and debtors, for it is emphasised that the plan is to encourage such settlements. Where a voluntary settlement is not effected, an adjustment commission can place the farmer on a five-year budgetary plan, with an adjustment of his liabilities at the end of this period based upon the productive value of his farm under budgetary conditions. During this period a first charge on income is to be the reasonable expenses of the occupier for living, then adequate working expenses of the farm, payment of rates and taxes, and any rent required in respect pf land used for farming. Finally, provision is made for the allocation of any balance for the payment of interest due to mortgagees in the order of their respective priorities. If a majority in value of the creditors so desires, a supervisor may be appointed who will be payable from the farming receipts as determined by an adjustment commission. At the end of the budget period, the Court will consider the mortgagor's position to determine the amount of his equity in the farm property, make consequential amendments in the amount of his mortgages and make available to unsecured creditors any surplus assets he may have. The procedure to be adopted in assessing the mortgagor’s equity is generally as follows:— (1) From the gross income during the buqtaetary period, there is to be deducted the mortgagor's living and working wpenses, (b) rates and taxes, (c) j interest computed at a rate to be fixed by the Court on the average value of stock and other chattels used in the production of the gross income. (2) The residue is deemed to be net 1 income insofar as it is produced from the land independently of other factors ’ employed in the production of the gross income. (3) This residue is to be capitalised at a rate to be fixed by the Court. The capital sum so ascertained is referred to as “the productive value" of the mortgagor’s farm lands. Having ascer- f tained this productive vaius, the Court t fixes the value of the mortgagor's equity in the farm property, which may . be up to 20 per cent, of the basic value, 1 but must not exceed this to the detri- I ment of secured or unsecured creditors. The remaining amount is appropriated to the mortgagees of land and chattels. In each case the excess over the amount ao appropriated is discharged from the mortgages affected and becomes an unsecured debt. The reduced amount "of the mortgages will bear a rate of inter■est fixed by the Court and a mortgage, , where overdue, is repayable in five j years. .

The Bill applies only to mortgages in respect of land used for farming, horticultural and pastoral purposes to which the Mortgagors and Tenants Belief Act, 1933, applies. This will exclude mortgages executed subsequent to April 17, 1931. The Bill was introduced by GovernorGeneral’s Message and was read a first time in the House of Representatives to-day. CORPORATION BTT.T. AMOUNT OF DIVIDEND FIXED. The Mortgage Corporation Bill was being discussed on the third reading when the House of Bepresentatives rose at midnight. The Bill had previously been re committed to enable the Minister of Finance to insert, in place of the clause defining the dividend rate at one per cent, above the bond rate, a fixed dividend of 4} per eent.