MORTGAGE EXTENSION ACT.

Taranaki Daily News, Volume LVII, Issue 281, 6 May 1915, Page 8

MORTGAGE EXTENSION ACT.

THE PROPOSED AMENDMENT. FAR-REACHING EFFECTS. By Telegraph.—Press Association. Auekland, :-t May ;J. That the Hon. A. L. Herdman's announcement as to tli? probable amendment of the Mortgage Extension Act affects widespread interests is illustrated by the variety of opinions that are expressed with regard to the practical steps that should be taken to redress grievances of lenders who consider that borrowers are dishonestly hiding behind the Act, and investing their money at a more remunerative rate oi interest.

One nasi- tTiat has boon brougnr, u> the notice of a Star reporter is that in which' an (Auckland lender is said to have been plated in a most unfortunate position owing to the Art. Having borrowed from the bank at 0 per cent., in the strength of a mortgage, for several thousands, falling due in a few months, the mortgagee in due course applied for payment of the principal lent on mortgage, and was told that under the provision of the moratorium the borrower had decided not to repay and had reinvested the money, which lie had borrowed at 4'/L> per cent., at 8 per cent. The lender was paying (i per tent., whilw his own monev was onlv bringing in 4 1 /?, per cent., thus making a gift of l>/ 2 per cent, to the defaulting mortgagors. In an interview, Mr. Robert Hums the president of the Auckland Chamber of Commerce, expressed the opinion that the Act should be altered so that instead of a person who had lent money having to prove that the borrower was in a position to pav and had deliberately neglected to do so, the onus of proof that he could not redeem the mortgage, owing to the war would rest upon tlie defaulter. The Art, as it existed at present, was distinctly unfair. Mortgages on which monev was lent at 4'/. or .>;,;, per cent, fell due, and. although the money was worth much hii-'-er interest than that, borrowers who could afford to pay up refused to do *<> hi order to invest at a higher rate or interest. Withdrawal or modification ot the Act was hound to press hardly upon a. gr,,,t many ~„„„„ but Sllit . Hole provision could be made to cover certam eases. A (ioveriinient ollicial might be appointed in each important centre to act as arbitrator between the borrower and the lender ami decide each case on its merits. '

Mr. Arthur Myers, M.l'., ox-Mi„ister oi !• mance, while agreeing that it was desirable to deal with the defaulting reinvestor, took the view that great caution must be exercised in amending the Act. lie considered that the -»rt was- undoubtedly justilied on the outbreak of hostilities. Tii the ligbf 0 f experience it was apparent that there were a number of people who pabablv were seeking protection of the Act under unjustifiable circumstances but having regard to the continuance of the war he ,!i,[ n ot think it was desirable to repeal it. There was no doubt that some amendment was desirable, but he thought that the Covernnient should exercise great caution in altering the