$25m Aid Plan For Home Loan Battlers
Sydney Morning Herald
Monday March 29, 1993
Beleaguered borrowers in the troubled HomeFund mortgage scheme will receive grants of up to $5,000 under a $25 million rescue package announced by the State Government yesterday.
The Minister for Housing, Mr Webster, said the grants were to help those who had taken out Affordable and Low Start loans to refinance with private institutions. Mr Webster estimated that the grant might help up to 10,000 borrowers quit the HomeFund scheme.
The package also allows for monthly grants of up to $85, for a maximum of 12 months, to Low Start borrowers experiencing financial hardship. Mr Webster said this would enable them to absorb the 6 per cent annual increase in repayments built in to their mortgage agreements.
In addition, compensation will be paid to all current and former HomeFund borrowers affected by the so-called 10-day gap problem. (Until January 1992, thousands of HomeFund borrowers made their repayments on the 20th of each month, but did not have the payment deducted from their mortgage until the start of the following month - a gap which effectively increased their overall repayments.)
Any disputes will be referred to an independent panel for determination.
Mr Webster said $25 million would be diverted from the housing budget to the Home Purchasers' Assistance Fund this financial year to pay for the new measures. However, the final cost of the package would depend on how many HomeFund borrowers took advantage of it.
He said the measures were in addition to those recommended by the McMurtrie report into the HomeFund Scheme and implemented by the Government last year. These included providing stamp duty and interest subsidies and allowing former public housing clients who quit HomeFund to return to public housing.
"The Government has a moral obligation to go beyond the recommendations of the McMurtrie report, and offer further compensation and assistance to borrowers," said Mr Webster.
The Government's offer is being made in a bid to head off the Opposition's HomeFund Mortgage Relief Bill, which would allow borrowers to seek compensation in the Commercial Tribunal.
Mr Webster said the Opposition's bill would threaten the introduction of the Government's package. Both he and the Opposition spokeswoman on housing, Mrs Deirdre Grusovin, are hoping for support from the Independents, who have yet to decide their stance.
Mrs Grusovin dismissed the Government's package yesterday, describing it as a stopgap measure.
She welcomed the compensation for those affected by the 10-day gap, but said that in thousands of cases, the $5,000 grant would not enable borrowers to refinance.
The monthly grant of $85 would not save many Low Start borrowers, whose monthly repayments were, on average, about $1,000, she said.
"This package is not addressing the injustice that is there for some hundreds of HomeFund borrowers who have already lost their homes or are facing the loss of their homes.
"This is really all about just keeping the lid on HomeFund and putting off the day of reckoning until a later date," Mrs Grusovin said. "It's not good enough."
© 1993 Sydney Morning Herald