LOANS FOR HOMES

Evening Post, Issue 37, 12 August 1936, Page 4

LOANS FOR HOMES

STATE ADVANCES

POLICY OUTLINED

MINISTER EXPLAINS

MORTGAGE ADJUSTMENT

j The policy which will be followed' L . by the Government in (he adminis- ] 2 tnuion of the State Advances-! 2 Corporation was explained by ihe 2 Minister of Finance (the Hon. W. j . Nasli) in a statement ■ issued last] t evening. The Minister dealt at i t length willi various phases of the . Corporation's activities. He said t that for llie present special building I loans should be made available to s assist families where the joint inj come of husband and wife does not i exceed £6 a week,, although * con- ! sideration would be given to other ; cases. "The board of management of the , Corporation will be responsible for the administration of both ordinary investment loans and the special loans authorised by this year's Act," said ■; Mr. Nash. "The board will continue its ordinary business operations of ' lending for such purposes as it deems ~ proper on its usual investment basis. ' Under this heading there is no restriction on the amount of the loan or the " purpose for which it is raised, but the J Corporation is restricted by the Act to ■ the granting of loans up to a limit of • 66 2-3 per cent, of the productive value > of the security as assessed by the 1 board. • "However, the board will also make \ advances beyond this margin in /proper L* cases. Such loans will be mainly for the rehabilitation of farmers and the r building of homes. They are to be 1 termed special loans. } "In cases where persons arc willing . and able to pay some reasonably sub--3 stantial deposit towards the cost of i building a home, the Government proi poses to find the balance at as low a 3 rate of interest and with as small a - margin as are reasonable. That state- , ment embraces the position generally _ where the persons applying- for special t building loans are able to satisfy the I Corporation that they as mortgagors 3 will have a reasonable equity in their . homes. ' "It seems to the Government that > for the present special building loans • should be made available to assist - families where the joint income of husi band and wife'does not exceed £6 a 1 week. However, some reasonable al- ? lowance to this limit will be made to r meet the different circumstances, and' • responsibilities of households. The 5 board will take the circumstances of 3 each case into consideration, and where the families exceed three dependent ■ children additional income earnings ■ will be allowed for as appear reasont able.. .-.-•. | SPECIAL CASES. > "The board will give a similar conE sideration to the amount of the, loan r that may .'be borrowed in .any of the . special building cases and to the best t terms that can be offered by the. Cor-' . poration to the particular applicant so i as to bring the amount of the instal- { mentto a figure that will-not absorb i more than a reasonable portion of the i borrower's weekly wage or income. This general aim can only be attained ■■ by bearing in mind three consldera- .. tions—the amount of the loan, the .• term over which the repayment is to ;: be secured, and the annual income of ['. the applicant. '-.'.. , * "The -board will have to guard against encouraging any borrower to ■ assume a burden beyond his earnings, '. haying regard in each case to the.fam- ! ily In..' some cases ! a building loan up to £iOOO for the ! home and section may be warranted ] and perhaps something higher in par--1 ticular cases where there are four or ; more children dependent on their parents. . "In applications for special building loans the board will then give in each ' case its special consideration to the following factors:—The character and ' general circumstances of the applicant; ' the necessity for a new house in the particular area; the income of the 1 applicant, and, allied to that, the amount of the loan liability that can reasonably be carried by him in his ■ circumstances. A BETTER SERVICE. "This year's Act contains certain '. special provisions directed to a better ; service and assistance for the mort- . gagor. I refer to the provisions for. a variation of the scheme of table ', mortgages, the condition of accepting a life insurance policy as a collateral ' security and to the special class of policy covering the reducing balance \of the loan, to the provision for '. periodical payments on account of . rates, insurance, maintenance ,of the ' security to the different rates of interest that may be charged in respect "of different portions of the same loan. 1 These matters will be considered by the board in relation to each case sub- ' mitted to it. "Section 37 of the Act prohibits a • mortgagor from giving any further mortgages or other charge over land • subject .to the Corporation's security • without the written authority of the board. There is also the provision under which the Corporation may call up the whole or any part of its loan in the event of the sale of the security unless the Corporation has consented to the sale. These two provisions' will enable the Corporation to prevent the capitalisation o:f the facilities of low interest rates and small margins provided by. the Government for specific purposes. • "Unless the applicant is proposing to ! build a home for the continued occupa- !. tion of his family he will not be eligible 1 for a special building loan from the 1 Corporation. The Corporation will 1 exercise its statutory powers to limit • the possibilities of abuse of State ; benefits. With this knowledge no buyer ■ can negotiate to purchase any security 1 mortgaged to the Corporation in the '> belief that he is buying, in addition to the property, exceptional finance • facilities. "The Government is desirous of assisting people to build homes in those places where the need for new homes is at present acute. The housing shortage is widely spread, yet there will be districts in the Dominion where a present shortage does not exist. In such cases the proper administrative outlook would be to assist in home . purchases rather than in the erection . of new homes. : ARRANGEMENTS 111™, ARCHITECTS. > "The Corporation has concluded arl rangements with the New Zealand In- ■ stitute of Architects whereby the ser- [ vices of architects selected by the Cor- ; poration will be available in different centres for the examination of plans ; and specifications and the general ! supervision of buildings in course of ■ construction. ■ Special fees have been ■ agreed to by the institute in reqogni- ; tion of the element of social service [ involved in the programme. General t planning features will not be over- , looked, and the arrangement made will

provide a proper check over building tenders.

"1 desire also to draw, public attention to the housing policy of the Government, as the advancing of money by the Corporation for the building of homes and the building of homes by the Government are closely related. There are j people who because of the circumstances in which they earn their livelihood or for some other good reason are unable to find a reasonable proportion of the cost of the section and home. The Government at an early date will commence building houses for renting to such people at a figure that will be in keeping with their incomes. PERMANENCY OF OCCUPATION. "Although these houses may not be purchased from the Government, the tenant will be assured of a permanency of occupation so long as he meets his obligations. The administration of these houses will be in the hands of the Corporation, and. with j this purpose in view the Corporation i has established a 'central record' for the names of people, including those applicants for special building loans who have not been successful in their loan applications, so that data may be readily available from which selections may be made of occupants for new houses. People desirous of having their names listed in this record should obtain a form of personal particulars supplied by the Corporation to all Post Offices. The completed form should be posted to the manager of the Corporation in Wellington, together with a covering letter stating! requirements. j

"The rpecial loan procedure may also be adopted by the Corporation for the purchase of existing dwellings. These loans will be considered by the Corporation in special cases, but as a general rule will not be available where the proposed purchase involves the disturbance of an existing tenancy. This means that as the provision is intended to secure a home for the applicant the dwelling must be vacant and ready for his occupation. The condition of the improvements and the age of the building will be factors for the consideration of the board of management of the Corporation. In general the considerations that will be applied to special building loans will be equally applicable to special loans for the purchase of existing dwellings. REHABILITATION OF FARMS. "I have stated that one of the purposes of the State Advances Corporation Act, 1936, was to provide money for rehabilitating farms. Special loans will in proper cases be available for this purpose and consideration will be given in all cases where there is a case for an advance in excess of the usual 66 2-3 per cent, margin, provided that the earning capacity of the land, in the opinion of the board of management, so warrants. The Corporation is now organising its field staff and the facilities of the Corporation will be operated in conjunction with the Government's proposals, for the relief of mortgagors. "The same guiding principles will be applied by the Corporation where special loans are granted, whether the special loan is for building a home or rehabilitating the farm. If the Government provides money for any farmer, it will be to help that farmer to stay on his farm and to obtain the best result, from highland. It will not be t- enable the farmer to sell his farm. "The State Advances Corporation is now sufficiently advanced in its arrangements to enable applications for these special loans to be dealt with. The post, offices throughout the Dominion have, been supplied by the Corporation with forms of application, pamphlets; ahd: personal circumstances forms for the.convenience of inquirers. In addition, the Corporation is represented in many, towns throughout the Dominion, and by its branch offices in Auckland, Wellington, and Christchurch. These agencies and branches will be of assistance in affording advice to intending applicants for loans from the Corporation. . "In many cases, both of farmers and ■home owners, it will not be possible to effect any improvement in the position of a mortgagor merely by refinancing. It is the intention .of the Government shortly to introduce its proposals for legislation to enable the rehabilitation of mortgagors. IMMEDIATE ADJUSTMENT. "It is recognised on all sides that the legislation of 1931 and 1933 was, in effect, a moratorium only, a postponement of the day of enforcement or adjustment. It is the considered opinion of the Government that enforcement of mortgage claims would, at this stage, create desperate hardship, and that the proper course to pursue is by way of adjustment. Under the existing legislation final adjustment is limited to rural mortgagors, and they must endure a stay order for five years before qualifying. Other classes of mortgagors and lessees are omitted from the 1934-35 Act.

"It is now intended that all qualified classes of mortgagors and lessees shall be entitled to an immediate adjustment based on the present-day value of the security. The mortgagee will be secured for, every-part of his loan that is sustained by that value, and the disposal of the balance will depend on the circumstances' of . the applicant. After adjustment every qualified fanner, home owner, and other applicant will be able to work his farm and enjoy his home free from the intolerable burden of debt that could never be paid and released from the constant fear of dispossession."