HDB: $431,000 CPF – But homeless soon?

HDB: $431,000 CPF – But homeless soon?

It was 8 p.m., at Blk 108, Potong Pasir Ave 1, on a Thursday night, when our firstcouple came for financial counseling.
Mr Lim (not his real name) is a 47 year old taxi driver who is a bankrupt.

Mrs Lim is an accounts executive.

They have three children  – two are in school and one is in NationalService.

They have obtained permission from the Official Assignee to sell their ExecutiveCondo (EC), so that they can try to clear their debts, and buy a resale HDB flat.

HDB concessionary loan rejected

However, HDB has just sent them a letter dated 1 June, rejecting their appeal throughtheir Member of Parliament (MP), for a HDB Concessionary Loan.

They have appealed a few times directly to the HDB and also through their MP, overthe last few months.
EC owners not eligible

The HDB letter of rejection states that “Applicants who wish to apply for a secondHDB concessionary loan must meet all the eligibility requirements. One of which isthat they must not own/have an interest in any private property, including ExecutiveCondominium (EC).

You are currently owning an EC. Hence, your household is not eligible for a secondHDB concessionary loan”.
You have enough cash proceeds?

“From the documents submitted, we gathered that you are selling your EC at$954,000. After deducting the outstanding loan of $276,000, your wife and youare expected to receive CPF refunds of about $431,000 and cash proceeds of about$213,000. You have informed that you use about $106,000 to discharge frombankruptcy, $70,000 to settle your wife’s debts and the rest for your children’suniversity fees”.

“Your wife and you may wish to use your combined CPF refunds and available cashsavings to outright purchase an affordable flat, before using the balance to settle yourdebts”.
Facing bankruptcy and homelessness

As Mr and Mrs Lim have been trying to explain to the HDB in their appeals, it is theOfficial Assignee’s requirement when permission was given to sell their EC that the cash proceeds must be used to discharge his bankruptcy debts, his wife’s debts mustbe cleared because she may be made bankrupt too and thus not be able to purchase aresale flat as their combined net income are already insufficient to pay for their ECmortgage monthly repayments and the minimum monthly repayments on Mrs Lim’scredit card debts, and the Cash-over-valuation for a resale flat.

Mrs Lim’s credit card debts of over $70,000 were primarily incurred to keep theirhome for the last seven years, which has a monthly mortgage of over $2,000. Theywon’t have this problem, if theirs is a HDB flat, as HDB flat sales proceeds areprotected from creditors.

Since some EC owners may in a sense, have been forced by HDB to buy, becausethey exceeded the Income Ceiling of $8,000 for HDB flats, why are they beingdiscriminated as never ever needing a second HDB concessionary loan like Mr andMrs Lim?

How can the HDB assume that all EC owners can get a bank loan?
Singaporeans who are undischarged or discharged bankrupts, have adverse ConsumerCredit Bureau credit records, ever been sued in their lifetime for a debt, loan quantumless than $100,000, etc, are typically denied housing loans by banks.

This leaves them short of about $30,000 to $50,000 (depending on the resaleflat’s COV), which they are asking the HDB to lend to them as a second HDBconcessionary loan, because no bank will lend them a housing loan as the husband is abankrupt.

Second concessionary loan eligibility?

As we try to explain the HDB’s new second concessionary loan eligibilityrequirements which were changed last year to allow downgraders to be eligible, butat the same time imposed more stringent eligibility requirements such as that half ofthe cash proceeds from the previous flat’s sale must be utilised for the resale flat, MrsLim, broke down and kept saying she cannot understand why they have $431,000 ofCPF but yet they can’t buy a resale flat, because of HDB’s policies?

Will policy review come in time?

We tried to console her that as there is now a new National Development Minister,who has been saying almost every other day that he will look into the HDB’s policiesand help Singaporeans who may be suffering from their HDB housing problems, thathopefully the policies which affect Singaporeans like them, may be reviewed soon.
Homeless soon?

Although we all put up a brave face and tried to console Mrs Lim that the newMinister may look into issues like theirs soon – we knew deep down in our hearts thatthey may be homeless, by the middle of next month, as they had already signed thedocuments to sell their EC following the Official Assignees’ approval.

Leong Sze Hian

P.S. Lee Mei Wei, Ko Siew Huey and Leong Sze Hian provides free financial counseling every Thursday from 8 pm. To 10 pm.,at Blok 108, Potong Pasir Ave 1

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.