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some extra assistance the staff bandied this work in a most creditable manner, and I am pleased to be able to report that the offers of adjustment have now been made practically to all mortgagors. Up to the 31st March, 1986, 17,296 mortgagors had signified their acceptance, and their accounts have been adjusted accordingly. In laying down the principles to be followed in the adjustment of accounts under section 39 the Board gave special consideration to the position of those mortgagors who were in arrears with their instalments, and decided that advantage should be taken of the opportunity of capitalizing arrears and thus giving mortgagors a fresh start. Normally the capitalization of arrears would have resulted in increased half-yearly payments under the mortgage, but this tendency has been offset wherever possible by the extension of the term of the mortgage. The aim has been to place mortgagors in such a position that, notwithstanding the capitalization, half-yearly payments have been reduced rather than increased. The Board is hopeful that as a result of the concessions granted in this way mortgagors will in the future be more able to meet their obligations to the Corporation. Turning now to matters of general administration, I would like to remark that the Board has continued the policy followed by the State Advances Office of extending the utmost consideration to those mortgagors who were in difficulties. The Board has paid particular regard to the possibility of rehabilitating rural mortgagors where inspection has shown that a measure of assistance for the purpose of salvaging the security is necessary, and it was the intention of the Board as soon as the organization of its field staff was complete to carry out an intensive review of securities in this class with a view to formulating a progressive policy. The delays which have occurred in the matter of field staff have handicapped our efforts in this direction. In regard to urban securities assistance has been made available to deserving mortgagors for painting and repairs to mortgaged premises, and the Board has also assisted deserving mortgagors who are not in a position to provide the money to meet necessary repairs by postponing the principal part of the instalment to enable the mortgagor to finance the cost of necessary work. In other cases straight-out salvage advances have been, granted and the amount added to the mortgage debt. The Board recognized in the early stages of the Corporation that steps should be taken to organize a field staff. The lack of such an organization seriously handicapped the State Advances Office during recent years. The arrangements previously subsisting between the State Advances Office and the Valuation Department were largely continued in regard to reports from District Valuers in respect of existing mortgage accounts and new loans. In view of the large numbers of applications received by the Corporation for new loans, it was inevitable that some delay should occur, and special arrangements were made in other directions to expedite the work. However, until the field staff is properly organized a rapid despatch is not always possible. Our thanks are due to the Valuer-General and his Department for the effective manner in which they have co-operated with the Corporation in spite of heavy demands in other directions. It was considered by the Board that before any final steps should be taken towards the organization of a field staff a definite decision should be reached in regard to discharged soldiers settlement business of the Lands Department. The mortgage business of the Lands Department includes current-account advances, and it is essential that the Corporation should have a field staff actively operating before the currentaccount mortgages are handed over for administration. The delay which has occurred, while beyond our control, has proved a considerable handicap. I desire to refer briefly to the position in regard to interest due and in arrear and to the question of reverted securities before passing to a short commentary on the balance-sheet figures. Interest due and received. —The interest due in respect of mortgage securities (excluding local-authority securities) for the period from Ist August, 1935, to 31st

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