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SINGAPORE – The Housing Board (HDB) can confiscate their apartments from apartment owners if they intentionally make misleading or false statements when transferring ownership of an apartment, following changes to a law that Parliament passed the Tuesday (October 6).
Currently, such mandatory acquisition is only allowed when apartment owners deliberately make misleading or false statements for the purchase of apartments, and not for the transfer of ownership of the apartment.
Another change made to the Housing and Development Act will allow approved banks to pledge real estate loans involving HDB floors as a guarantee of liquidity from the Monetary Authority of Singapore (MAS).
This is part of a preventive measure announced by MAS in September when it launched a Singapore dollar term credit facility to provide liquidity to local banks by including a broader range of guarantees.
This allows Singapore banks and finance companies to gain access to more funds if they have liquidity problems due to the Covid-19 pandemic.
Introducing the bill for debate, National Development Minister Desmond Lee assured HDB apartment owners that they will not be “adversely affected” in any way.
“This arrangement will not affect the homeowners’ rights to their flats, nor will it result in any change in the terms and conditions of their home loans,” he said.
HDB apartment owners will continue to service their home loans with the approved financial institution.
“In the highly unlikely scenario where 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 MAS, “said Mr. Lee.
Other changes made to the law include increasing the maximum number of board members on the HDB board from 12 to 15.
Louis Ng (Nee Soon GRC) said that allowing banks to use HDB loans made by them to obtain credit facilities and buy back MAS transactions carries risks, as more mortgage loans will become delinquent or defaulted in the current economic crisis. This means that banks will have a harder time repaying MAS if households are unable to repay their loans.
To this, Mr. Lee said that the current home loan default rate remains low and stable at around 0.5 percent.
“Most borrowers can pay off their mortgages and should continue to avoid further accumulation of debt,” he said.
On the HDB’s extended powers to seize flats from landlords who made false statements, Ms Nadia Ahmad Samdin (Ang Mo Kio GRC) asked if that would “unduly penalize” landlords who may be innocent and unaware of the misrepresentation of the facts.
Lee said HDB will investigate each case thoroughly before initiating the mandatory acquisition.
He added: “HDB will not exercise its powers to compulsorily acquire HDB flats lightly and will generally only contemplate such action as a last resort for egregious cases and when the owners of the flats refuse to regularize ownership of the flat.
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