MINISTER RELEASES REVIEW OF HOUSING CORPORATION MORTGAGE GUARANTEE SCHEMEHousing
The Minister of Housing Murray McCully has authorised the release of a Coopers & Lybrand review of the Housing Corporations Mortgage Guarantee Scheme, which was scrapped in 1991.
"I am satisfied that the Corporation is taking all necessary steps to protect its interests, as well as those of its former clients and the taxpayers who own it," Mr McCully said. "In effect, the Report criticises the management of the Scheme during the 1980s, when there was a different board, different executives and a different Government, but endorses the actions taken by the Housing Corporations current board."
"The claims files were all on paper and had never been computerised. The Housing Corporation has advised me that claims files are still contained in some of 9000 boxes spread over seven storage locations."
"I understand that the review team decided to report on what it could access rather than try to reconstruct files for all 78,000 Guarantees given. However I am satisfied they have been able to construct a sufficiently accurate picture of the situation and make appropriate recommendations. The Corporation has assured me it will fully investigate and pursue appropriate remedies where any suggestions of improper behaviour are raised involving the Scheme."
"Residential Mortgages Ltd (RML) is obviously prominent in the review," he said. "I am satisfied that RML and the Corporation have made some progress in a confidential discussion they have held on the Mortgage Guarantee Scheme but I will be closely monitoring further developments."
"The Coopers & Lybrand report highlights that the way the Housing Corporation ran the Mortgage Guarantee Scheme was a reflection of the prevailing attitude in the pre-reform era of the Public Service," Mr McCully said. "Standards of Public Service management and accountability have improved significantly since then."
"The object of the Scheme when it was introduced in 1977 was to reduce the cost of mortgage finance and the amount of deposit required, and encourage the private sector to provide loans for housing. But by the early 90s there was a ready supply of loans, he said, and private sector insurers had created a mortgage guarantee insurance market by then."
"I am also advised the Coopers & Lybrand review team has endorsed the procedures used in assessing and approving claims under the Scheme," Mr McCully said.
"In 1993, the claims paid out peaked at $5.3M (some 30% in value of claims paid out so far). The review indicates the sums paid out have been declining since then to just over $200,000 so far this year (1.1% in value of the claims paid out so far)."
"The Coopers & Lybrand review indicates the Housing Corporation has more work to do before questions about improper collusion and related issues can be answered satisfactorily, and the Chairman has pledged an all out effort to carry out the review recommendations as soon as possible."