TR Emeritus

Sep 10 2013

Less HDB loans in arrears?

I refer to the article “Fewer defaulting on HDB home loans:
Cases of mortgage arrears falling steadily, halving from number of cases five years ago” (Straits Times, Sep 8).

It states that “HDB housing counsellors like Mr Jeffrey Tee (above) help those who fall into arrears with their mortgage payments. To date, they have referred 826 households to social agencies and voluntary welfare organisations for job placements and other support.

The number of people who have been defaulting on their Housing Board (HDB) home loans has halved from five years ago, new figures show.

As of July, there were just over 16,000 arrears cases, according to new HDB data.

There were 18,100 cases of mortgage arrears at the end of last year, capping off a steady decline from 32,300 cases at the end of 2008.

This represents a decrease from 7.7 per cent to 4.9 per cent of all flat owners servicing their HDB home loans.”

Half the story?

Telling you that HDB loans in arrears has declined without the statistics on HDB bank loans, is like telling you half the story.

I understand that the ratio of HDB bank loans to HDB loans has been increasing over the years.

So, with the number of HDB bank loans rising at a faster rate than HDB loans, the total percentage of total loans in arrears may in reality have not improved as much against the 2008 recession year.

Also, loans in arrears may decline because very few flat owners in arrears would wait for the HDB to compulsorily acquire their flat at 90 per cent of HDB’s valuation with no cash-over-valuation (COV) – and thus disappear from the in arrears statistics when they sell in the open market.

Why no HDB bank loans statistics?

As to “Banks contacted did not reveal their number of mortgages in arrears. DBS Bank’s senior vice-president of deposits and secured lending Linda Lee said it has stayed “consistently low” over the years.

“In recent years, the man in the street has increasingly recognised public housing as a very good asset,” said Mr Ong. “Owners better manage their monthly mortgage repayments… so overall, this led to a reduction in arrears.”” – if the number in arrears has “stayed “consistently low”” – why not disclose the statistics?

Also, why only cite one bank, why does the HDB not disclose the HDB bank loan statistics?

No foreclosure statistics?

What about the statistics on HDB loans and HDB bank loans’ foreclosure statistics?

With regard to “Typically, home owners tend to default on their loans due to unforeseen circumstances, such as illness and losing their jobs.

The solution for both families, as with many others, was to downsize to a smaller flat. “We try to talk to the residents and explain their financial limits,” said Mr Tee, adding that instalments more than half a family’s monthly income are untenable. “If your financial situation doesn’t warrant (a big flat), at this juncture you need to right-size to a smaller flat. In the future, if you can, nobody will stop you from buying a bigger one.”

Since 2008, housing counsellors have helped 4,242 households get HDB loans to get a smaller flat. Of these, 349 obtained their loan last year, less than a quarter of the 1,620 in 2009.

The HDB has about 70 housing counsellors across its 21 branches.

Arrears can take an average of between three and six months to be resolved. Counsellors may also advise flat owners to sublet spare rooms for extra income, or help them work out temporary instalment plans until they find a job. To date, they have referred 826 households to social agencies and voluntary welfare organisations for job placements and other support.” – downgrading may generally only be feasible if the net sales proceeds are sufficient together with a new HDB loan which is typically subject to eligibility conditions, and the Minimum Occupation Period (MOP) – to enable the purchase of a smaller resale flat.

Breakdown of cases’ outcomes?

Since there were a total of 139,000 HDB loans in arrears cases from 2008 to July 2013, with just 4,242 households helped by the HDB to get a HDB loan for a smaller flat, what happened to the rest of the 134,758 cases?

What about the HDB bank loans in arrears cases?

So much more cases this year?

Finally, if the arrears are declining, how come the number in the seven months of this year, at 16,300, is so much more the the 18,100 in the whole of last year?

Leong Sze Hian