STATE ADVANCES

Waipa Post, Volume 49, Issue 3505, 14 August 1934, Page 4

STATE ADVANCES

POSITION OF MORTGAGORS IN TOWN AND COUNTRY. * » DEPARTMENT’S SECURITIES. Difficulties arising from the prevailing conditions are reflected in the position of the State Advances Office with its mortgagors. The annual report by the superintendent of the office, Mr E. O. Hales, for the year ended March last, wh’ch was tabled in the House of Representatives last week, stated that these mortgagee’s had not, in the main, securities other than those chai’ged to the department. n Consequently, no reserves were available to carry them over the time of depression, and the sources from which their annual charges were met arose from receipts of the mortgaged assets or their earnings. INCREASED CASH PAYMENTS. “ A present improvement in the general position appears to be indicated by the increased cash payments being made to this office by mortgagors in arrear with their payments,” stated the report. “A comparison with preceding years will best illustrate this point. The amount of the annual increase in the arrears payable to the office has shown a definite downward tendency, notwithstanding the fact that the number of mortgagors who have been unable toi meet their commitments over the same periods has increased. The increase in arrears for the year ending March, 1932, was £642,184, for the year ending March, 1933, £559,210, and for the year ending March, 1934, £508,132. “ The number of mortgagors in urban and subui'ban properties failing in their payments has increased du!ring the past twelve months, but the . facilities offered through the system * of frequent and regular collections have enabled the department to restrict the amount of the arrears in each case as much as possible. A general acceptance of these facilities by the mortgagors is now met with as the value to the mortgagors them- - ,! selves of these measure is being recognised. For the year ended March, 31, 1934, 343,127 actual collections were made, the total sum' received from these collections being £514,344. “ With those properties in urban and suburban areas that have come under the control and administration of the department no change has at present been made in the policy of refraininjg from forcing realisation sales. Meantime the action is restricted to the regaining possession of the asset and its letting until a more favourable market for realisation is reached. The real estate . movements are closely watched, and adequate steps will be taken in sufficient time to meet the mai’ket when the conditions are definitely more buoyant than those which exist at the present time. The same policy cannot be applied, for obvious reasons, to rural securities, and offerings of reverted securities are therefore from time to time necessary.

RURAL MORTGAGORS. “ The advance in the price of wool during last season offered some relief to many of the office mortgagors. Most of the office mortgagors in sheep, however, have not large flocks, and any steep increase in their annual returns was not therefore experienced. In some cases, however, it has been noticed that the mortgagors have taken advantage of their increased revenue to reduce the arrears under their mortgages as much as possible. “ The position of the dairying industry, insofar as it is reflected by office mortgagors in dairying, shows a slight decline for the year just ended as compared with the immediate preceding year. The total number of mortgagors dairying on freehold and leasehold land as at March 31, 1934, was 10,222. Of this number approximately 54 per cent have met their coipmitments to the office. The number in default at Mlarch 31, 1934, is 4665, as compared with 4455 for the corresponding period ending March 31, 1933. “ It is clear that the losses in this department will be increased if the present indications of continued low price-levels are realised. A number * of the department’s securities affects land that may be described as ‘ marginal.’ Unless, the price-levels rise, this marginal land will revert, as its continued development will not be justified by economic considerations. ULTIMATE LOSS NOT SHOWN. “ Until the department disposes of its properties and collects payment of the outstanding arrears, the ulti- ' mate loss will not be ascertained. To provide in some measure for this contingency the balance of gross profits available has been transferred to the reserve for loss. It is regretted -that no accretion to the Advances Office Sinking Fund created for the redemption of the loan liability was possible during the year.” The report stated that the total amount advanced from the inception of the office in 1894 up to March 31, 1934, was £75,462,498 4s 9d. Payments of half-yearly instalments, together vJth repayments in full to release securities, have to date totalled £32,950,915 5s 4d, leaving a balance outstanding of £42,511,582 19s sd. The total losses from the inception amount to £785,563 3s lid, or £1 0s lOd in every £IOO of the amount advanced. This total did not include losses which might in fact exist but were not definitely ascertainable until secur ties were realised. The total capital amounts to £44,880,936 8s sd, and the cost of management expenses is £65,522 6s, 7d, being 0.146 per cent, or 2s lid per £IOO of the capital employed. Mortgages and. instalments of principal repaid during the year amounted to £1,402,245 13s. The interest collected amounted to £1,825,714 6s Bd, and the interest paid on loan moneys was £1,667,208 14s lid. Interest amounting to £22,675 18s 8d was capitalised during the year.