Mr. DUNNING:

Yes, absolutely; and

we are in the fortunate position of having no losses to date. Those who studied the matter very closely from the standpoint of lending institutions attach a great deal of the credit for that condition to the working out of the monthly payment plan.

Mr. BENNETT:

Some of the big loan

companies in England which provided for monthly payments make the very same observation ; they attribute their freedom from losses to the monthly payment plan.

Mr. BENNETT:

Is that fixed by the

terms of the contract? I see that it is in the old act. Should not the losses be borne in proportion to the advances made?

Mr. DUNNING:

The old provision is that in the event of a loss being sustained in connection with a loan from whatever cause arising, the amount of the loss shall be allocated as follows-

Mr. BENNETT:

That is the contract?

Mr. DUNNING:

Yes. It reads:

(a) If at the time the loss occurs the amount owing under the mortgage or hypothec for principal, interest, taxes, costs and other charges properly due on the mortgage account, is more than the amount advanced by the company two-thirds of the loss will be borne by His Majesty the King, represented as aforesaid, and one-third by the company;

(b) If at the time the loss occurs the amount so owing under the mortgage or hypothec is less than the amount advanced by the company two-thirds of the loss will be borne by the company and one-third by His Majesty the King, represented as aforesaid.

Mr. BENNETT:

Then the state of the

loan is the test?

Mr. DUNNING:

The state of the loan is the test, and it is a standard form of agreement. Then follows paragraph (c), which deals with what happens in the event of sale of the mortgaged premises.

Mr. DUPUIS:

Paragraph (f) reads as follows:

(f) except as provided by paragraph (g) of this subsection, any loss sustained in respect of any loan shall be borne by his majesty and the lending institution or local authority. . . .

If we go back to section 2, part I, the explanatory note (f) reads:

"Local authority" means any province, municipality . . .

Mr. DUNNING:

Having authority to

undertake a housing scheme.

Mr. DUPUIS:

Yes. I do not see anything in the act which prohibits such action, but would the bill forbid the municipality or any local authority or lending company to sell such houses at any time after they are built, provided that certain conditions proposed by the minister have been complied with? I am interested to know that, having regard to the experience I had in municipal affairs some years ago. The committee will recall that we had federal legislation under which similar associations or companies built houses in municipalities and small towns and even in cities, and it was found to be a complete failure, a complete loss to the municipality. I have in mind municipalities which lost large amounts of money, over a million dollars. I do not want to compare municipalities with governments, but sometimes we find from experience that they are worse than the government as to their capacity to administer something that private individuals could administer. With a municipality administering houses in that way, the residents of the municipality generally believe that they are not bound to pay the rent, not bound to make repairs or pay for them. Sometimes they go further than that; they do not take care of the property at all, and the municipality generally speaking is in a very bad situation. So that unless there is some measure which forces the municipality to impose its city regulations upon the tenants, I do not believe it is a good thing. That is my personal view. That is why I am in some cases in favour of selling these properties to individuals. I believe it is a good policy to give facilities to municipalities to build these low cost houses, but at the same time I believe it would be good policy to facilitate the selling of these houses to reliable persons in the municipality.

National Housing Act

Mr. DUNNING:

In this part of the act the municipality comes into the situation only if it decides to assume itself the position of a lending institution. That is, the local authority becomes the lender, and as the lender it enters into an agreement with the minister in the same manner as any private lending institution would do. Then of course the local authority becomes just the same as any other lender having to put in a great deal of its own money. No local authority has yet availed itself of that privilege, and I gave some consideration in the redrafting of the bill to the question whether it would be desirable to leave in connection with part I the right to a municipality to become itself the lending institution. I thought, having regard to all the possibilities which might arise, that it was desirable to leave it in such a position. It has never occurred yet, but I can conceive of its occurring in places where the municipality exists for one industry, and the industry might desire that the municipality should become for that municipality only a lender under the terms of part I. We do not bar that, but of course if a municipality does become a lender under the terms of part I, it must comply with all the provisions which the minister must exact from private lending institutions.

Mr. DUPUIS:

I am sorry, in this discussion I was quite ahead of the clauses. What I said should apply to part III.

Mr. BENNETT:

I find it a little difficult to understand that we would incur a liability " not exceeding $600 per habitable room " in the case of a multiple family dwelling. Under the statute " multiple family dwelling " is to be defined by order in council. That leaves a very uncertain situation to be dealt with. We can pay losses not exceeding $4,000 in the case of a single family dwelling and $600 a room for multiple family dwellings; and what is a family dwelling and a multiple family dwelling is to be settled by the governor in council under regulations, if I remember aright, provided for in section 8.

Mr. DUNNING:

Yes, defined for the purpose of this part.

Mr. BENNETT:

I should like a little explanation as to how these figures are arrived at. We are providing for losses; it is not a question of values. That would mean that the property they were contemplating building would be worth somewhere between

$6,000 and $7,500, because it would be very bad business to contemplate a loss of as much as $4,000 in the other type of case. That is the only clause about which I have any difficulty. I quite understand the crown undertaking to assist, but we are going to assist up to a $4,000 loss.

Mr. DUNNING:

No-loan, not loss.

Mr. BENNETT:

Loss in respect of loan.