MORTGAGE CONTRACTS

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

MORTGAGE CONTRACTS

PROPOSED LEGISLATION INVESTMENTS ADVERSELY AFFECTED STRONG CRITICISM IN HOUSE (From Our Parliamentary Reporter) WELLINGTON, Sept. 15. The action of the Government in bringing mortgage contracts entered into since 1931 within the scope of the Mortgagors and Lessees Rehabilitation Bill was strongly criticised by Sir Alfred Ransom (Opposition, Pahiatua) during the second reading debate on the Bill in the House of Representatives to-night. Contracts, he said, had been made with the full knowledge of the conditions existing, and in those circumstances it was most unfair to the mortgagee to pass legislation adversely affecting his investment. Sir Alfred said that another unfair clause in the Bill was that basing the productive value of a farm on the prices ruling over a period of from eight to 10 years. Last year had been a good season for sheep farmers, but under the Bill the prices received that season would be excluded from the calculation in fixing the value of the property. There was a grave underlying danger in the legislation, that it might injure the credit of a client farmer, and that would be a serious state of affairs for the primary producers.

So important a matter as the rate of interest was not mentioned in the Bill, but was to be gazetted at some future date. There was special provision whereby private arrangements could be made by Government departments and trustees if they were confirmed by the Court of Review. If such a provision were good for the State and the trustees surely it was equally as good for private mortgagors and mortgagees. The Government, added Sir Alfred, appeared to imagine that there was an obligation on it to amend any legislation passed by the previous Government. The general principles of the Bill would be most inequitable in operation. The Rural Mortgagors Final Adjustment Act was one of the most far-reaching measures ever passed in New Zealand, and, as other speakers had said, probably cost the late Government a lot of popularity. In his opinion, however, the present Bill was even more objectionable. The proposals in the Bill would make investments in landed property most unpopular, and for that reason, if no other, the Government should give the measure very careful consideration. " Had it not been for the financial ■assistance of mortgagees in the past New Zealand would not be in the position it is to-day of being the greatest exporter of butter and cheese in the world,' - said Sir Alfred. "The mortgagee is being made the scapegoat to rehabilitate the farmer when the Government itself promised to do so by guaranteed prices. A grave injustice will be done to a section of the community. Mortgagors are to be given the right to sell on a rising market at the mortgagees' expense. They are to be permitted to capitalise remissions and gamble on them."