Hon. CHARLES A. DUNNING (Minister of Finance) moved the second reading of Bill No. 132, to incorporate the central mortgage bank.
He said: Mr. Speaker, I find that it is not necessary for m© to spend much time discussing the motion for the second reading of this bill, for the reason that on the resolution I went much more extensively into the principle than I thought I had done, and in Hansard of May 6, at page 3665, hon. members will find a reasonably complete discussion of the principle involved.
There has been some criticism of the lateness in bringing down this measure. In that connection I desire to point out that the financial resolution, after standing on the order paper for some time, was dealt with on May 6 and the bill produced immediately thereafter. I confess to the house that at
that time I had the idea that a month's adjournment of parliament was very likely, and that consequently there would be considerable time during which all interests affected across Canada would have full opportunity to study the provisions of the bill. However, we are here on the 23rd day of May and a sufficient time has, I think, elapsed to enable those who are interested in this type of legislation to gain an adequate conception of what is contemplated by the bill.
Briefly, the principle involved is the use of the national credit in adjusting the mortgage burden and in providing facilities for refinancing mortgages in the future. The bill offers to the farmer mortgage debtor, and the home mortgage debtor, below 87,000 in principal amount, a reduction in the load, which was assumed in many cases years ago undel more favourable circumstances than now prevail. The companies which become members of the bank will be obligated to write off all arrears of interest with respect to such mortgages in excess of two years' interest.
Second, the debtor will be relieved in cases where the mortgage debt exceeds eighty per cent of the value of the mortgaged property by the writing off of the excess over eighty per cent.
Third, the debtor will be relieved by the adjustment of the future rate of interest on his mortgage in those two classes I have mentioned to five per cent per annum, and an adjustment in the length of the term of the mortgage.
To the mortgage company becoming a member the plan involves that the dominion shall share over the next twenty years to the extent of one-half of the losses involved in writing off the arrears of interest and in writing down the principal, where necessary, to the eighty per cent limit. The debentures of the mortgage bank will be given to the member company, bearing interest at three per cent and running for twenty years, to the extent of one-half the losses involved in the write-down provided for by the bill. With respect to future refinancing of mortgages by member companies, to the extent that the member company takes advantage of the refinancing facilities afforded by the bill for the future, the member company must accept the conditions laid down by the mortgage bank with respect to maximum interest rates and conditions as set forth in the bill.
To the provinces this bill offers an opportunity. For a number of years past-probably for ten years-many of our provinces have felt compelled to legislate interfering with the terms of mortgage contracts. I do not believe that any provincial government has done so willingly; it has felt compelled to do
Central Mortgage Bank