Page 2747 - Week 08 - Tuesday, 23 June 2009
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They make a decision based on the information to hand and they say, “We will back OwnPlace.” I will read the third-last paragraph:
Genworth is able to provide lenders mortgage insurance on loans under the Own Place Program, designed to allow lower income households to purchase house and land packages under $300,000. Applications will be assessed according to Genworth’s current Underwriting Policy across our full range of products.
It goes on to say:
The only exclusion relates to any land that is under the Land Rent Scheme.
When you read the letter, it is quite clear that the global financial crisis had nothing to do with Genworth’s decision not to back land rent back on 14 October 2008. In fact, it was before the election. Since 14 October 2008, the government has known about this. The Chief Minister should have known about this. The Chief Minister did know about this. But he denies it. I read you the letter:
Dear—
public servant—
Thank you for submitting the ACT Government’s affordable housing initiatives to Genworth Financial … to review.
We have thoroughly analysed both the Land Rent Scheme and Own Place Program and would like to advise the following:
Land Rent Scheme
Unfortunately, Genworth is unable to provide lenders mortgage insurance on construction under the Land Rent Scheme.
Whilst initially reducing some entry costs into the housing market, this scheme presents a number of risks to us which does not commercially suit our current risk appetite.
Whilst this is not an extensive list, we have listed some of our main concerns in the following areas.
And there are seven areas. Not one of them is “exposure as a result of the global financial crisis”, as maintained by the Chief Minister and his office. The reasons are:
It is likely that loan to value ratios will be required at the higher end in view of your target market. Our risk appetite with construction loans factors in the land acquisition. As you may appreciate land plays a significant part in diminishing risk by effectively reducing the loan to value ratio as house price appreciation takes effect over the term of the loan. Excluding this factor would significantly inflate any pricing model and severely inhibit mortgage insurance affordability.
Not the global financial crisis. The second arrow point is:
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