TODAY, Weekend, 10~11 December 2005
Letter by Leong Sze Hian
CPF lost through HDB loan
I refer to the letter from the Housing and Development Board, “We build homes, not
houses” (Dec 6).
Mr friend applied for an HDB executive flat under the Joint Selection Scheme (JES), with
his mother and sibling applying for a five-room flat. When his family’s gross income fell
by about half during the last economic downturn and he became self-employed, he wrote
to the HDB to cancel his executive flat as he was afraid he would have difficulty
servicing the HDB loan. He was prepared to pay the necessary forfeit and his mother and
siblings were willing to top up their downpayment to the usual 20 per cent, instead of the
10-per-cent concession under the JES.
But HDB pointed out that “if any of the applications under the JES is withdrawn for any
reason whatsoever, the other application would become ineligible to proceed with the
purchase”.
As his mother and sibling had waited for about five years for their flat, my friend went
through with the purchase. Then his wife was retrenched and his business did not work
out. He is now a taxi driver with two young children to support.
He bought his flat in 2000 for $416,000. Now, he and his wife have exhausted their CPF
and have not been able to pay their mortgage loan instalments for more than six months.
He got his Member of Parliament to write to HDB, asking if he could surrender his flat
and have the CPF he had utilised refunded to his account.
In reply, HDB said it “does not accept the surrender of flats if the owners have completed
the requisite minimum occupation period (MOP)” – five years in my friend’s case – as
the owners now “can choose to sell the flat in the open market”.
But if he sells his flat in the open market, he wil

ll lose the CPF he and his wife have
accumulated over more than 20 years, because the current outstanding HDB-subsidised
loan of $330,000 is the same amount as the flat’s current market value.
Prior to October 2002, when the first charge on private residential property bank loans
was changed from the CPF to banks, the CPF used (plus accrued interest) had to be
returned to the borrowers’ CPF accounts in the event of foreclosure. In January 2003,
when banks started offering housing loans for HDB flats, the first charge was changed to
banks – such that one’s CPF would no longer be protected in the event of foreclosure.
In the last economic downturn, there were about 22,000 HDB subsidised loans in arrears
for more than three months.
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Will these Singaporeans lose their CPF too, if they cannot service their HDB-subsidised
loans in the future?

TODAY, Friday, 23 December 2005
Reply by Tan Heng Huay
Deputy Director, Public Affairs
Corporate Development Dept
Housing & Development Board
Tan Chui Leng
Deputy Director
(Housing Schemes)
Central Provident Fund Board
CPF charge: No change in order
We refer to the letter “CPF lost through HDB loan” by Mr Leong Sze Hian (Dec 10).
With regards to the CPF charge for HDB flats, we wish to clarify that there has been no

change in the order of charge. Prior to January 2003, HDB granted loans to buyers of
HDB flats with HDB having the first charge, followed by CPF Board.
From Jan 1, 2003, banks were allowed to provide loans to HDB flat buyers. Hence, the
bank will take first charge followed by the CPF Board.
The banks merely step into the shoes of the HDB and take first charge on the mortgage
when they grant loans to HDB flat buyers.
When members sell their HDB flats bought with CPF funds, they are required to refund
the CPF withdrawn, including accrued interest.
However, in the event that the selling price after settling the outstanding loan and resale
levy (if any) is insufficient to cover the full CPF withdrawn and interest accrued, the CPF
Board will only require the refund of the net sale proceeds, if the sale is conducted at fair
market value.
As owning a home is a long-term commitment, we would like to reiterate that home
buyers should exercise financial prudence. This would minimise their risk of running into

financial difficulties when servicing their mortgage loans.