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COMMUNITY REINVESTMENT (HOUSING) BILL

COMMUNITY REINVESTMENT (HOUSING) BILL. Presentation to Portfolio Committee on Housing on 3 February 2004. COMMUNITY REINVESTMENT (HOUSING) BILL LEGISLATIVE CHALLENGES. Section 26 (1) right to access adequate housing (2) State compelled to take legislative measures

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COMMUNITY REINVESTMENT (HOUSING) BILL

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  1. COMMUNITY REINVESTMENT (HOUSING) BILL Presentation to Portfolio Committee on Housing on 3 February 2004

  2. COMMUNITY REINVESTMENT (HOUSING) BILL LEGISLATIVE CHALLENGES • Section 26 • (1) right to access adequate housing • (2) State compelled to take legislative measures • e.g. Housing Act of 1997, Home Loan & Mortgage Disclosure Act of 2000

  3. POLICY CHALLENGES • Obligations of financial sector under the Botshabelo Accord (ROU) • Target of 50,000 loans/year was not met • No targeting since 1998 • Institutional mechanism required to: • Replace MIF & Servcon • Facilitate credit-linked subsidies

  4. Mortgage Indemnity Fund (MIF) • Mortgage Indemnity Fund (MIF) operated from 1995-1998: • Charged with the normalisation and stabilisation of the mortgage lending environment; negotiated with community leaders • Offered indemnity for losses in previously redlined areas (but indemnity was not usable because of delays in completing the foreclosure process)

  5. MIF’s accomplishments • Establishing sound working relationships between stakeholders • Significant increase in lending in formerly redlined areas • 140 000 loans were granted with a value of R10 billion • 73 000 of the above loans worth R4,1 billion occurred in lower segment of the housing market • Assisting in resolving disputes in 29 areas resulting in an 87% payment record in areas where payments had stopped 5 years previously

  6. Termination of ROU in July 1998 • Record of Understanding was terminated by Cabinet as of July 1998; • There has been no structure for dealing with redlining since the closure of MIF in 1998; • Cabinet confirmed role for government in regulating the housing finance sector to ensure access.

  7. RECENT HISTORY OF COMMUNITY REINVESTMENT (HOUSING) BILL • Bill submitted to Cabinet early August 2003. • Cabinet resolved that the mattter be held in abeyance pending the drafting of a Financial Services Charter. Once this has been completed the need for a legislative framework to ensure access to housing finance will then be considered.

  8. FINANCIAL SECTOR CHARTER • Was signed towards end of 2003. • Does not direcly address the main issues which the Community Reinvestment (Housing) Bill (CRB) attempts to address. • “First – order retail products” (Section 2.27 of Charter) means, inter alia, credit for low-income housing (minimum income of R500 per month).

  9. FINANCIAL SECTOR CHARTER (Continued) • “Targeted Investment” means financing of or investment, inter alia, in low income housing for households with a stable income in excess of R1500 per month and less than R7500 per month. This income band will be increased in line with CPIX on 1 January each year.

  10. FINANCIAL SECTOR CHARTER (Continued) • No specific commitments to Housing Finance appear in Charter. • No provision for penalties for non-compliance with provisions in Charter – it is just a “gentleman’s agreement” like the ROU.

  11. COMMUNITY REINVESTMENT – THE WAY FORWARD • Task team to be established to put in place the necessary institutional arrangements which support the Government’s Constitutional imperative of affording everyone the right to have access to adequate housing (includes housing finance). • Regulations under Home Loan and Mortgage Disclosure Act (HLAMDA) to be finalised and promulgated as soon as possible. • HLAMDA to come into operation immediately the Regulations are in place.

  12. Departmental Community Reinvestment Policy needs to be developed urgently. • Department needs to know where banks stand – awaiting commitments coming out of the Financial Sector Charter by 30 June 2004. • Department needs to know where Government stands on community reinvestment – awaiting for greater clarity on matter from the National Treasury.

  13. Department to revisit discussions which took place at recent Housing Summit, the turnaround strategy and the Department’s Policy and Reseach Agenda. A review of these three items will assist in putting the CR programme in perspective and ensure that a meaningful and focussed strategic plan is put in place. --oOo--

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