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SINGAPORE: Financial institutions will be allowed to use their Housing and Development Board (HDB) security interests in flats as a liquidity guarantee from the Monetary Authority of Singapore (MAS), as part of the Government’s plan to improve their access to the financing of the plant. bank in the midst of the COVID-19 crisis.
The new rule is part of the amendments to the Housing and Development Bill passed on Tuesday (October 6).
During the second reading of the bill, National Development Minister Desmond Lee said that although Singapore banks have healthy liquidity reserves, increased access to credit will strengthen their resilience given the current economic winds and is a ” preventive measure”.
“Strong and stable banks are in a better position to support the financing needs of both individuals and businesses in Singapore,” he said, adding that the practice of accepting residential property loans as collateral for liquidity is an established practice among major central banks across the country. the world.
“The provision of ample and timely liquidity by MAS can prevent and mitigate liquidity tensions in banks, reducing the probability of secondary effects to the economy in general,” he added.
This change will not affect HDB’s homeowners’ rights to their flats, nor will it change the terms and conditions of their home loans, Lee said. Homeowners will continue to service their home loans with the approved financial institution during the period that the guarantee is granted to MAS.
“In the highly unlikely scenario when an approved financial institution defaults on its MAS loan, MAS will take over the residential property loans and HDB owners will be asked to redirect their loan payments to another approved financial institution designated by MORE, “he said.
The current home loan delinquency rate remains low and stable at around 0.5 percent despite the weak economy, he said, in response to a question from Member of Parliament (MP) Louis Ng about the delinquency rate. of home loans.
MP Nadia Samdin asked if the use of HDB loans as collateral would increase pressure on banks to execute loans with outstanding arrears. Lee said the new liquidity line does not affect the way banks manage their residential property loan portfolio.
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“As banks now have access to an additional level of liquidity insurance provided by MAS, their ability to deal with liquidity stress should actually improve,” he said.
FLOOR REPLACEMENT
Another update to the bill is to extend the power of HDB and allow it to make compulsory purchases of flats when landlords intentionally make misleading or false statements, or misrepresent the facts in transferring ownership of the flat.
Currently, the agency can take over an apartment if the owners commit major infractions, such as unauthorized subletting, or if they were dishonest when they bought the property.
Mr. Lee said the amendment is intended to strengthen HDB’s position of taking over the unit as a last resort if the owners “do not cooperate and refuse to regularize the ownership of the property.”
“Such powers are necessary to allow HDB the ability to take commensurate action against the small minority of apartment owners who disobey HDB rules, and to safeguard the limited supply of public housing for those in need,” he said.
It will not be used against owners who did not know they made false statements or misrepresented facts, Lee said, in response to MPs’ concerns that the mandatory takeover action is too harsh, especially if the owner had accidentally provided false information in their HDB applications. .
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“HDB will not exercise its powers to acquire homes on a compulsory basis lightly and, in general, will only contemplate such action as a last resort for atrocious or serious cases, and when the owners of the apartments refuse to regularize the ownership of the apartment”, Lee said.
When asked by MPs whether the revisions to the law were due to an increasing number of false statements or misrepresentations, Mr. Lee said that was not the case.
Instead, the new wording is a preemptive move to deter potential wrongdoing in relation to the transfer of flat ownership, he said.
The third major change to the bill is to increase the number of seats on the HDB board from 12 to 15.
Lee said this will allow the agency to bring more diverse points of view and experience to provide better homes and living environments.
“These efforts will benefit from new insights, for example in the areas of new technology that can help us develop greener, smarter and more sustainable cities, and in the area of health and aging issues to guide our efforts to deliver a quality of living environment for an aging population, ”he said.
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