COMMUNITY REINVESTMENT (HOUSING) BILL

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COMMUNITY REINVESTMENT (HOUSING) BILL

• Presentation to Portfolio Committee on Housing on
  3 February 2004

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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

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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

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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)

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• MIFs 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

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• 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.

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(No Transcript)
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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.

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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).

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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.

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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
  gentlemans agreement like the ROU.

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COMMUNITY REINVESTMENT THE WAY FORWARD

• Task team to be established to put in place the
  necessary institutional arrangements which
  support the Governments 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.

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• 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.

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• Department to revisit discussions which took
  place at recent Housing Summit, the turnaround
  strategy and the Departments 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.
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