MORTGAGE RELIEF ACT

Hawke's Bay Herald-Tribune, Issue 124, 11 June 1937, Page 8

MORTGAGE RELIEF ACT

-Own Correspondent.)

New Problems of Administration Introduced THE BANK'S ATTITUDE

(By Telegraph-

WELLINGTON, This Day. The operation of the Mortgagors and Lessees Rehabilitation Act, 1986, was the subject of mention by Mr A. T. Donnelly, chairman of directors of the Bank of Now Zealand in his annual address to shareholders to-day. "The genoral purpose of the Act in relation to farmer applicants, ' ' said Mr Donnelly, '"is to retain them in the use and occupation of their farms as efficient produc.ers, and to make sucb adjustments of their liabilities as will ensure that the liabilities secured on any property do not exceed the value of that property, that the rent of any leasehold property does not exceed the rental value of that property, and that the total amount and terms of payment of all their liabilities (whether secured or unseeured) are such that, after allowing for all normal current expenditure and providing for the maintena;ice of themselves and their families in a reasonable standard of comfort, theapplicants may reasonably be expected to meet their liabilities as they become due, either out of their own moneys or by borrowing on reasonable terms.'* "The general purpose of the Act in relation to home applicants 'is to' retain them in the occupation of their homes, and to make sucn adjustments of their liabilities as will ensure that the liabilities seeured on any property do not exceed the value of that property, that the rent of any household property does not exceed the rental value of that property, and that the total amount and terms of . payment of their liabilities that are secured by adjustable seeurities or are adjustable debts are such that the applicants may reasonably be expected to meet them as they become due, either out of theu cwn moneys or by borrowing on reasonable terms.' '•'The general purpose of the Act in relation to applicants who are not farmer applicants or home applicants 'is to enable them to retain possession of their mortgaged or leasehold property, and to make such adjustments of their liabilities as will ensure that the liabilities secured on any property do not exceed the value of that property, that the rent of any leasehold property does not exceed the rental value of that property, and' that the total amount and terms of payment of those of their liabilities that are secured 'by adjustable seeurities or are adjustable debts, are such that the applicants may reasonably be expected to meet them ua they become due, eithej out of their „wn moneys or by borrowing on reasonable terms.''"' - It was pleasing to be able to report that, havmg regard to the magnitude oi the bank's operations, comparativeiy iew customers had applied for adjuscment of their obliguuous to the oank, continued Mr. Donnelly. In many cases the applfications of customers hau been for the adjustment of their liabiu/ties to creditors other than the banh; out as, under the Act, an application ror the adjustment of any. liability involved a review of the applicant's whole posxtaon, the bank had. necessarily been concerned in all such appiications. "A comprehensive Act of this nature, imposmg novei eonditions as between creditor and debtor," he said, • ' has unavoidably introduced new problems of administration, partieularly wiiere considerable time must eiapse before appiications are finally dealt vvith; but in all cases the bank has endeavoured to promote the smooth working of the legislation by devising methods wbich would enable the various applicants to carry on their businesses, farming or otherwise, without embarrassment. "I should like to clear up a misconception which may exist in the minds of some of our customers and possibly others. It is not the poiicy of the bank to , call up advances arbitrartly at any time. While bank advances are repayable on demand, the occasions on which formal demands for repayment are made upon customers are rare, and it is only where thero are very strong reasons for taking such a step that this is dono. It must be remembered that tho success of the bank depends on the goodwill of its customers and that if its borrowing customers are subjected to treatment whieh they have reasofi to consider is unnecessarily arbitrary, that goodwill may be speedily lost. A little refleetion would show how unwise it would have been for the bank, even had there been no relief legislation restricting the powers of mortgagees, to embark in depression years on a poiicy of insisfcing upon repayment of loans and, in dofault of repayment, exercising the powers and remedies of a mortgagee."