By Leong Sze Hian
I refer to the article “Plunge in number of households surrendering flats” (Straits Times, Nov 12).
Flats surrendered dropped 7 times?
It states that the number of households that surrendered their flats to the Housing Board (HDB) due to mortgage arrears fell sharply by about seven times from 2008 to last year.
Bank loans’ forced sales dropped even more?
“The drop in households that lost their HDB flats due to forced sales by banks was even more pronounced: from 225 to six over the same period.
National Development Minister Khaw Boon Wan provided these figures yesterday in a written reply to Mr Chen Show Mao (Aljunied GRC).
In 2008, 505 households surrendered their flats to the HDB due to mortgage arrears.
This spiked to 711 in 2009 before dropping to 69 last year, representing a fall of more than seven times over a five- year span.
The number of such households with at least one lessee aged 55 and above also went down, from 108 in 2008 to 14 last year, said Mr Khaw.
For households that lost their flats in bank mortgagee sales, the number fell from 225 in 2008 to six last year.
None of the households last year had lessees aged 55 and above, compared with 10 in 2008.”
Tracking HDB delinquency and foreclosure statistics?
I have been tracking and writing about HDB foreclosure and delinquency statistics for about a decade now.
2004 – have delinquency, but no foreclosure statistics?
Shortly after banks were allowed to offer HDB bank loans from 1 January, 2003 – the delinquency (more than 3 months in arrears) statistics for HDB bank loans were disclosed in a Parliamentary reply, but not the bank loan foreclosure statistics.
2005 to 2012 – no delinquency and no foreclosure statistics?
Then, a few years later, in the HDB’s reply to a letter I wrote, it said that it did not have the statistics on HDB bank loans’ delinquency and disclosure statistics.
For a period of about about 8 years from 2005 to now, we never had any HDB bank loans’ foreclosure or delinquency statistics.
2013 – have foreclosure, but no delinquency statistics?
Now, in the subject 11 November Parliamentary reply – we have the HDB bank loans’ foreclosure, but no delinquency statistics?
The HDB loan and HDB bank loans’ foreclosure statistics may be quite meaningless, because over the years, the process of foreclosures has become such that – no one in his or her right mind would be stupid enough to wait for foreclosure.
Nobody waits for foreclosure?
Let me explain. For HDB foreclosures, it is based on only 90 per cent of HDB’s valuation, you lose any cash-over-valuation (COV) and it is the valuation on the date of notice of compulsory acquisition instead of the date of acquisition, which can be months or even years apart.
For HDB bank loans’ foreclosure – the penalty interest of as much as 10 per cent per annum kicks in when a household is in arrears, and the foreclosure disposal price may be very low and uncertain, compared to what can be obtained in an open market sale.
So, you may be literally forced to sell in the open market as advised by the HDB or the bank, and practically everyone else.
Therefore the question is how many households have sold in the open market because they couldn’t pay over the years?
Why no bank loans’ delinquency statistics?
“Yesterday, Mr Khaw also revealed that the number of households with outstanding HDB loans and in mortgage arrears of three months or more has gone down as well.
There were 32,309 such households in 2008, falling by 44 per cent to 18,066 last year”
HDB can’t pay dropped 44%, but Comcare increase 50%?
Don’t you find it rather strange that whilst the number of households who are in arrears has dropped by 44 per cent (excluding bank loans in arrears because it is not disclosed now) – the number of families which successfully applied under Comcare has increased by about 50 per cent?
Declining HDB loans, increasing bank loans?
Moreover, the number and total mortgage HDB loans outstanding has been declining, whilst that for bank loans has been increasing both in number and quantum, over the years.
Why have longer tenure and higher Mortgage Servicing Ratio for bank loans?
Especially with the recently announced changes allowing bank loans to have a maximum loan tenure 5 years longer than HDB loans, and Mortgage Servicing Ratio 5 per cent more too – even more people may opt for bank loans, considering that bank loan interest rates have always been lower than HDB’s since 2003.
1 in 4 can’t pay were over 55?
With regard to “But while the total number of such households with at least one elderly lessee aged 55 and above has gone down from 8,169 in 2008 to 6,502 last year, they now form a larger percentage of households in arrears.
Last year, 36 per cent of these households had an elderly lessee, compared with 25.3 per cent in 2008″
– Does it mean that on a proportional basis – more people over 55, increasingly can’t pay?
What does this tell you? HDB flats may not be as affordable as we have repeatedly been told – if more and more people can’t pay when they are over 55 – about 4 in 10 households in arrears were over 55, despite the 20 per cent drop in the total number of elderly households last year, despite working almost all their lives?
Shocked that 18,000+ can’t pay – wait till you include bank loans in arrears too?
In respect of “Mr Ku said that while the numbers have fallen, he finds it a “shocker” that there are more than 18,000 households in arrears for three months or more.
“Despite near full employment, there are families who cannot foot the bill for subsidised housing,” he said, arguing that more help should be given to these families in hardship”
– Mr Ku may get a bigger shocker if and when the bank loans’ delinquency statistics are also disclosed in Parliament.
Strange and sad?
With this type of ”half-backed” Parliamentary replies – it is not just strange but very sad indeed!