Academics and officials battle over home mortages

The issue of banks conditionally taking over housing loans and debts in 921 quake-hit areas trig-gered a confrontation between government officials and academics at a conference on the subject held by the Academia Sinica (中央研究院) yesterday.

The main focus of the debate was the banks' suggestion that they would take over such housing loans and debts only if four conditions were met. The banks insist that: only loans for destroyed buildings will be covered, not land; only non-commercial buildings or apartments are eligible; homeowners must plan to rebuild on their original sites; and only loans and debts longer than seven years will be included in the program.

Liang Tsi-yuan (梁啟源), a researcher at the Institute of Economics at the Academia Sinica, argued against such conditions in his report to the conference -- saying the banks' proposal would offer little help to quake victims and make future urban renewal plans more difficult.

However, Cheng Tsong (陳沖), deputy minister of the Ministry of Finance (MOF) said that as far as the ministry is concerned, the banks' proposal is acceptable.

"First of all, focusing on non-commercial buildings destroyed in the 921 quake offers relief to the most needy victims [compared to owners of rental properties]. Secondly, if banks and quake victims discuss mortgage matters directly, banks could save on the cost of lawsuits [against those who can not pay their mortgage right now].

"Society would also be relieved from having to face some thirty thousand and nine hundred cases. If the government doesn't ask the banks to allow homeowners to delay payment of their principle and interest, banks could file lawsuits whenever they wanted, creating a logjam in the judicial system."

Lai Ching-Chui (賴清祺), director general of the financial analysis department at the Council of Economic Planning and Development (經濟建設委員會) which is in charge of post-earthquake reconstruction planning, said that banks taking over housing loans and debt would not contradict CEPD's long-term plan.

Lai said, "It is appropriate that banks deal with small scale or individual cases [instead of asking the banks to unconditionally take over all the housing loans and debts]. As for areas destroyed on a larger scale, urban renewal is the long-term solution, and CEPD has asked local governments to propose their ideas for new towns."

However, Tseng Chu-wei (曾巨威), of the department of public finance at National Chengchi University, warns of a probable clash in the future between banks and the MOF on the one hand and the CEPD on the other, over the issue of urban renewal.

Tseng said that "once the problem of housing loans and debts is solved between the banks and qualified quake victims, the victims would naturally want to rebuild their homes immediately, instead of waiting for the CEPD to finish its urban renewal design.

"Therefore the CEPD's plan will fail since the MOF and the banks will finance new homes on a case by case basis instead of homes being rebuilt as part of a unified resettlement plan."

He said that a better solution would be to insure victims' basic needs are taken care of now. Then the government will have a better chance asking people not to rush to rebuild in their original locations but to "to wait for a new life in a new town."