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Wednesday, 31 March 1965

Senator McKENNA (Tasmania) (Leader of the Opposition) . - I have been very interested in what the Minister for Defence (Senator Paltridge) has had to say on this subject. If I understood him correctly, the Housing Loans Insurance Corporation is setting its face at this stage against the possibility that a borrower may find his own lender and take him along to get the benefit of the insurance. This would not be looked at with pleasure by the Corporation. That type of situation may happen quite frequently. Let us consider the case of a solicitor who has, perhaps, £100,000 to invest on first mortgage with adequate security on behalf of an estate or client and proceeds to advocate to his client that he should take advantage of this Bill and lend large sums of money, backed by the guarantee of the Government, in effect. Do I take it that if a solicitor went along with a set of proposals for a mortgage in that situation that at the moment, in the conception of the Corporation, that type of transaction would not be acceptable? I could apply the same type of situation to estate agents and to the other category mentioned by Senator Wright, mortgage brokers, who flourish rather extensively in the community and render a very real service. If I understood the debate, from these private sources in one year alone the sum of £300 million would be available.

Senator Wright - No. That is said to be the amount estimated outstanding for 1962.

Senator McKENNA - At a particular point of time? Well, quite obviously a very considerable sum of money is in play. I put it as a proposition to the Minister that he has himself acknowledged that it will be difficult to encourage thinking on the part of the financial institutions and others to adopt this new procedure. Financial institutions do not readily change. I put it, not with any assurance but as a proposition to the Minister, that perhaps the quickest way to get this type of operation accepted would be to encourage people such as solicitors, estate agents and mortgage brokers to be the first clients of the Corporation instead of these three large bodies who will take a considerable time to alter their pattern of lending. That is so according to the Minister himself.

Has any consideration been given to the fact that probably the quickest way to secure acceptance of the services of this Corporation would be to interest people such as solicitors, estate agents, mortgage brokers and others in that category? That may well be - on a proper consideration of the facts - the quickest way to get this scheme afloat. Would the Minister say whether consideration has been given to that proposition? Would he also indicate whether, in the event of two private persons, a borrower and a lender, going to the Corporation in the immediate future, they would be accepted or rejected?

I know that the Minister puts his argument on the ground that it is very convenient, administratively, to the Corporation to deal with a few big institutions. I understand the argument put; that those institutions would get to know what the Corporation requires and would realise the need of notifying the insurer or the Corporation if there were default under the mortgage. Yet, after all is said and done, the rules relating to default and all the rest of those things will fall into a fairly narrow compass. Even the intelligent private individual would be alert as to what were his rights and obligations in order to conserve the full benefit of the insurance. There are no great complications about that. No high intelligence would be required. The mere need to safeguard the insurance would be enough stimulus to any intelligent lender to make sure that he complied with the requirements of the Corporation. Those requirements could not be very complicated in respect of each individual loan. When all is said and done, irrespective of whether the loan transactions come from three major categories of financial institutions or not, each loan has to be looked at on its own merits as an individual proposition. They cannot be disposed of in bulk. Each one has to be looked at in relation to the security, the standard of the dwelling, the character and competence and income earning capacity of the borrower. Each transaction would require a separate individual study. Why then does the Government propose at this stage to set its face against somebody who comes along with one loan, two loans or three loans instead of 300? The problem in respect of each loan is the same. I shall be interested to hear the Minister's comments upon the aspects I have put to him.

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