SECOND MORTGAGEES

Otago Daily Times, Issue 22987, 16 September 1936, Page 8

SECOND MORTGAGEES

EFFECT OF NEW LEGISLATION LOSS OF INVESTMENTS MR R. A. WRIGHT'S ALLEGATION (From Our Parliamentary Reporter) WELLINGTON, Sept. 15. " One obvious thing I notice about this Bill is that second mortgagees will lose practically all of their investment if not the whole of it," said Mr R. A. Wright (Independent, Wellington Suburbs), continuing the adjourned second-reading debate on the Mortgagors anc 1 Lessees Rehabilitation Bill in the House of Representatives to-night. Mr Wright saiu it was questionable whether second mortgages should not be declared illegal in this country, or any othei for that matter. From conversations he had had with people who had invested their savings on second mortgage ne had found that in most instances they had lost almost all of the money they had placed in that way. An unfortunate thing was that many 0i such persons were widows who had little knowledge of the complexities of investment What money even now remained to second mortgagees would vanish under the legislation now before the House. Had the Minister of Finance anything in mind to assist persons whose investment would disappear through the operation of the Bill? asked Mr Wright. He pointed out that the application of the legislation was not confined to mortgages on land but involved money lent on the security of businesses and dwelling houses. Deprecating what he termed was an inference in the legislation that a mortgagee was a kind of usurer, Mi Wright emphasiso k J that the business of the country could not go on without lending and borrowing. The stigmatising of the borrowing of money was quite out of place. Few business men ; n New Zealand to-day were not working without the aid of money borrowed from the banks. Generally, it was a sound policy to do so. The idea that a mortgagee was a person who operated as a grasping money-lender in a large way was i, delusion. On the contrary, the average mortgagee was a small investor who, in many cases, had put his life savings into property in the belief that it offered a safe investment. Mr Wright predictec. that friendly societies and other institutions which invested the funds of a vast number of members would be hard hit by the Bill. , ', „, Mr C. H. iiurnett (Govt, Tauranga): They won't bp any different from anybody else. % Mr Wright: No, they'll all suffer. The positio- of the Sttte Advances Corporation would also be affected, continued Mr Wright, whe.said he presumed that it haa £40,000,000 out on mortgage. When the BUJ had finished with the corporation, it would lose prooably £5,000,000, and the taxpayer would be called upon to make up C, e loss. Much had been made by Government speakers of the evil of land speculation Mr Wrigl said, but it had gone on from th- earliest times, and it was Difficult to see how speculation could be stopned unless the Government owned all the land and buildings in the country. This was clearly not possible