Debated in Parliament on 12 Nov 2013.
Mr Zainal Sapari asked the Minister for National Development (a) what is the number of HDB flat owners who are currently in mortgage arrears because of CPF limits on mortgage repayments; and (b) in each of the past three years, what is the number of HDB flat owners who have been served eviction orders despite having CPF savings in their Special Account or the CPF Minimum Sum.
Mdm Speaker, 5% or 16,300 out of 335,000 households with an outstanding HDB loan are in arrears of three months or more. Among those in arrears, 0.7% or 111 households are affected by the CPF Valuation Limit.
These flat owners can continue to use their CPF OA savings to repay their housing loan after setting aside the required amount in their CPF accounts to ensure that they have at least some level of cash savings for retirement. If they are unable to do so, depending on the merits of each case, CPF Board may exercise flexibility to allow them to continue using their CPF savings to service their housing loans.
Madam, there may be many reasons why flat owners fall into arrears. They could have over-stretched their finances, or suffered a reduction in income due to loss of job or illness. HDB proactively helps flat owners manage their arrears early. If their financial difficulty is temporary, HDB will consider reducing or deferring their instalments, or work out an instalment plan to resolve their arrears. For flat owners who can no longer afford to keep their flats, HDB will explore more sustainable solutions, such as helping them to right-size to a smaller flat.
Compulsory acquisition is taken as a last resort against flat owners who persistently refuse to resolve their arrears, or work towards a sustainable solution, despite the assistance given. Eviction may have to be carried out in the final stage of compulsory acquisition if the owners are hostile and uncooperative. Over the past three years, none of the cases scheduled for eviction due to arrears was affected by the CPF Valuation Limit.
A balance has to be struck between allowing the use of CPF savings for housing and safeguarding savings in the CPF Special Account (SA), or the Minimum Sum Cash Component in the Retirement Account, for retirement
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purposes. Flat owners in financial difficulty should engage HDB early to work out sustainable solutions to solve their arrears.
Mdm Speaker, I thank the Minister of State for the comprehensive reply. Can I confirm that HDB will actually allow house owners to draw down from their Special Account or Minimum Sum to pay for their mortgages in cases where they could not come up with the cash mortgage payment?
Madam, in the case of an HDB concessionary loan being used to purchase a resale HDB flat, for instance, if the loan is still outstanding when the total CPF used has reached the Valuation Limit, the owner, if he is below 55 years old, can indeed continue to use the OA savings to repay the loan after setting aside half the prevailing CPF Minimum Sum in the OA and the SA. If he is 55 years old or above, the Minimum Sum cash component has to be set aside in the Retirement Account.
As for the use of the SA, in general, SA savings may not be used for property purchase, but we allow exceptions in the cases only of CPF policy changes affecting members' ability to service ongoing mortgage loans.
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