Two-generation home loans may bankrupt the next generation

Philip Ho
23 October 2010

Petaling Jaya, Oct 23 – Housing and Local Government Minister Datuk Chor Chee Heung has urged house buyers to sign up two-generation housing loans so that more Malaysians can afford to own houses.

“The most important thing is for the individual to own a house for his family to live in. If loan repayment is extended to the second generation, that means the family will remain intact,” said Chor yesterday after launching the Malaysia Building Society Bhd’s Ultimate Mortgage programme on Friday (Oct 22).

Chor said that the newly announced 2011 Budget also encouraged the two-generation loan term while denying that the move would increase the financial burden of the next generation.

“I don’t think it is a burden for the next generation because the repayment will be spread over a long period and the younger generation are financially strong. They can even buy a second house,” he added.

Klik4Malaysia (K4M) contacted Selangor state government’s chief executive of economic advisory Rafizi Ramli for comments from an accountant’s perspective, regarding the implications on the younger generation’s financial burden.

Rafizi expressed disappointment that the federal government was not addressing the country’s alarmingly high household-debt to Gross Domestic Product (GDP) ratio of 78% (RM 561.5 billion).

“The household-debt is primarily made up of car loans and housing loans and by stretching the loan period to two generations, you are forcing the next generation to bear a heavy financial burden as soon as they start work,” he said.
Rafizi then explained that with the current housing loan period of 30 years, a house owner would be paying accumulated interests that would be almost similar to the principal sum.

“If the loan is stretched to two generations, they (family) will be paying two to three times the amount of a house bought 60 to 70 years ago. Why is the housing ministry endorsing this proposal of prolonged debt on top of already high household-debt? he asked.

Rafizi said it was the first time he had heard of a government endorsing a two-generation loan, adding that it has never happened in the USA, Europe or even in the South East Asian region.

He also expressed concern that the younger generation would be bearing a financial burden that would be several times heavier than their parents because principle value of the currency may not be the same in 10 years.

“For example the value of RM100 may not be the same in 10 years due to inflation and also currency depreciation.

“Because of inflation and depreciation of money, over a time period, the next generation will already face lower purchasing power and by dumping such a huge financial burden on them, you are practically forcing them to live in debt,” Rafizi said.

He urged the ministry and also the federal government to control property speculation so that houses can be more affordable rather than allow developers and real estate agents reap over-inflated profits at the expense of the people.

When asked if Malaysia could face another property bubble like USA, he said, “The risk of a property bubble is not that high. Currently, our banking industry’s re-mortgage facilities are still tightly regulated as compared to America.

“I am more worried about the risks of individual bankruptcy because there will come a time when the people can no longer afford to pay their mortgages because they are tied down with so much debt.”

  1. #1 by yhsiew on Saturday, 23 October 2010 - 2:49 pm

    ///Rafizi said it was the first time he had heard of a government endorsing a two-generation loan……///

    Don’t be surprised that many Umnoputras or their cronies/relatives are lenders of home loans.

  2. #2 by boh-liao on Saturday, 23 October 2010 - 3:40 pm

    Of cos, dis Chor is darn stupid, just know how 2 korek, korek, korek
    No worry, by then d nation is bankrupt n everyone is a slave 2 someone

  3. #3 by House Victim on Saturday, 23 October 2010 - 3:41 pm

    With the ignorance and eye-closing of the Housing Ministry over housing projects with abandon projects, long delay of delivery, condo become apartments, loss of common facilities, buying a house in Malaysia is at “own risk” and a bully of the Developer and the Athoriries. These add up to higher cost and psychological burden of House buyer already for the last 30years and more. Especially with such type of housing termed as “Condo-style living” etc… LOOK LIKE CONDO, SOUND LIKE CONDO, APPROVED AS CONDO, ….but delivered no Common Facilities when the later are pocketed by the Developer, openly and “legalised” by the Authority!!

    S&P are at the mercy of the Developer and the bully of the Municipal. MOH has bankrupted the housing industry. How many house buyers had the feeling of being “cheated” by the STA and Housing & Developer Act? And, the Building and Maintenance Act which provide a loop hole for Developer & Government to delay prompt ST or the passing of Management to the House Buyers? A house to be under three separate Acts where the Building and Maintenance Act does not mention either the Housing or Strata Title Act!!

    How much has the Housing Tribunal court help the housing problems? When the Act is improper and rarely enforced!!

    The Housing Ministry has always deaf ears towards rightful complaints and Management Corporation are having no authority to monitor!!

    RISKING FOR A GENERATION IS NOT GOOD ENOUGH?? Which Housing Minister has done his JOB for the last 30 or more years?

    Why should it take 2 generations to buy a house? Is this a way to “improve” the confidence of the People towards the Government? To push mortgage instead of building the House for the People!! ? Building Banks or building Houses??

    The Summer Villa Condo in Subang Jaya within the Wangsa Baiduri “Condo” project has been dragged for the Issue of ST for close to 10years and it takes close to another 5 years to transfer. No only the the Facilities had gone but also land converted from Condo to Apartment and ST issed as Apartment!! The MC had been under illegal Council with non-registered proprietor voting and elected since 2005 without audited account and proper transfer of Account and Documents. MOH, Land Office, MPSJ…. play deaf!! PKNS transferred the land of the Club house to the sister company of the Developr before the buildings were launched. Common area – the landscaped garden in the middle of the Buildings turned into Public Park!! The piece of land was part of the Water Retention pond for Subang Jaya.

    The Authorities cannot even provide the credibility of Law enforcement or observance themselves, how can they persuade People to risk for 2 generations!!

    CCH, will you mortgage your house for 2 generations??

  4. #4 by gofortruth on Saturday, 23 October 2010 - 4:25 pm

    Throughout the generations, It has been a virtue for parents to leave behind something for their children when they die, like piece of land or house etc etc. Some are unable to leave anything but their offsprings understand their hardships just to stay alive.
    Now to advocate leaving a loan for the kids to continue to pay is ABSURDITY & STUPIDITY of the worst kind!!!!!!!!!!!!!!!!!!
    Why do we have such sub calibre people leading our country?????????????????????? Where are all the talented ones???? Singapore??????

  5. #5 by aawilliam on Saturday, 23 October 2010 - 5:28 pm

    And they call us to give birth many-many children………asshole!!!!!!!!!!!!!!!!

  6. #6 by lee wee tak_ on Saturday, 23 October 2010 - 5:43 pm

    BN administration endorsing financial slavery to the rakyat? what kind of shit is this?

    by getting BN to run the country for half a century, people become slaves to property tycoons who are the selected few, most probably cronies

    in Hong Kong when the son of a property tycoon marries a hot model/actress, they can afford jets and seaside villa as dowry (remember the dude who married See Chee Chee?) and guess who pays for them?

    my friend in Hong kong has to pay HKD3 mil for a 300 square foot apartment in Kowloon…a suffocating 1 room dwelling if you ask me.

    and imagine divorced couples still having to live together because housing is too expensive….

    the real issue is property speculation. Singapore is already taking strong measures to curb speculation, China’s property prices in Shanghai and Kwangtung are running into obscene and maddening level.

    the greed of man is killing ourselves…

    can the BN administration put behind the interest of their property crony and address the cost of living in Malaysia?

  7. #7 by Loh on Saturday, 23 October 2010 - 6:09 pm

    CSL of MCA does not know the issues concerning the 30% equity share target. The fact is the government lies with statistics. MCA should organize a group of experts including those from ASLI which conducted a study in 2006 and confirmed that the 30% target had long been exceeded. CSL is only inviting attacks for asking UMNO to revise the target. There is no need. Some other issues he should take up are as follows:

    The 30% target was to be achieved within 20 years. Once that target is reached, non-Malays are no longer required to sacrifice so that that 30% could be maintained. Thus, should it not be that so long as Malays have collectively attained the quantum of 30% share capital based on the total capitalization of the corporate sector as at 1990, NEP target is achieved? Obviously that 30% target cannot be on a ongoing current basis. If it were, then the target would have to be attained every year, or at any time. In that case policy which aims at Malays attaining the infamous 30% cannot be removed. Indeed the 30% was considered a threshold. Once that is attained Malays are deemed to have sound foundation to be independent of government assistance. NEP is finished.

    The government or EPU computes share capital based on par value or paid-up value rather than the market value. The argument was that unlike listed companies, there is no up to date figure for the market value of the equity capital of those non-listed corporations (Sdn Bhds). That argument makes sense for the non-listed companies. But it would be a folly to compute the share capital of listed companies based on par value to be consistent to those of Sdn Bhd. The problems would lie in estimating the market value of Sdn Bhd. One estimate would be to treat par value of this Sdn Bhd sector as equal to the market value. There would be error; an underestimation perhaps. But the error is not biased against any particular community. Any other estimation would be subjective, and there cannot be a true market clearance for all the Sdn Bhds. But what is certain is that it would be meaningless to compute the equity share of. Thus adding the total share capital of Sdn Bhds at par value taken as market value to the market value of listed companies could under count the total market capitalization of corporate sector (listed plus non-listed companies) the result would not distort the distribution of share capital by race. The valuation by EPU based on par value does not make economic sense. EPU holds on to the same valuation because it was so computed in the past. EPU should realise that in the past, the problem was in obtaining up to date market value for listed companies which prevented the proposed approach.

    It is trite that one cannot have the cake and eat it. One either sees it or eats it. It would be unfair to the non-Malay community if Malays who are given shares at a discount chose to cash them for immediate financial gains, and come back for refill. In fact some rich Malays have converted their shares to overseas holdings and their equity capital would not be captured in EPU statistics. So for the computation of Malays’ ownership of share capital, the value ought to be what Malays should have them in the form of shares had they not sold them. It would not be possible to trace the flow of those transactions. But estimation can be made nonetheless. KLSE has a list of listed companies which had to pay the 30% entry qualification; one can be created easily. Malays share capital in these companies should be based on their actual holding subject to a 30% minimum, valued at market price.

    PNB was established to hold shares in trust for Malays. Thus the shares held by the government should be counted towards Malays’ ownership. It is up to the government when it chooses to hand the shares over to Malay individuals. It makes no sense to claim that the target has not been achieved simply because the government chooses to hold on to the shares rather than distributing them. PNB said that it would go ahead with RM 5 billion 100-storey tower project. The market value of PNB would affect the attainment of 30% shares capital for Malays. So Malaysians have to be concerned because if affects the timing when Malays could achieve that 30% target.

    FELDA is worth at least RM 10 billion, but it has not been counted towards the ownership share capital of Malays, in the EPU statistics. So are companies held by FELDA. It is MCA’s duty to make sure that the omission should be rectifies. As FELDA does not have share capital issued, the net-worth of FELDA and its subsidiaries should be equivalent to its equity share capital at market value if it had been so organized.

    CSL should not shoot blind and ask the government to forget about the 30% target. The problem is the government chooses to lie with statistics. It knows that the target had long been achieved. UMNO pretends to relax on the demand for now and come back again. It is MCA’s duty to ask for correct and relevant statistics to prove once and for all that Malays have actually achieved the 30% target and so NEP should end. It is a different issue if UMNO wants to ask for 90% as its next target.

    I hope CSL will study this before opening his mouth again on the 30% issue.

  8. #8 by ENDANGERED HORNBILL on Saturday, 23 October 2010 - 6:32 pm

    Chor Chee Heung, good grief, and u r the Minister of Housing. It would be difficult to find someone more stupid!

    Why do you need ato pay for a miserable house in 2 generations when in some countries, one paycheck can easily pay for the house in under 7 years,ok?

    No point even suggesting u debate with me becos u can’t even smell my F#rt if u understand macroeconomics at all. Don’t know what degree or education u had but can’t mean anything at all. Period.

  9. #9 by Jeffrey on Saturday, 23 October 2010 - 6:59 pm

    K4M asked Rafizi on his take on the “2 generation loan” and Rafizi expressed disappointment that “the federal government was not addressing the country’s alarmingly high household-debt to Gross Domestic Product (GDP) ratio of 78% (RM 561.5 billion).”

    Does either K4M or Rafizi know exactly what’s the meaning of “2 generation loan”? Does 2 generation loan automatically means a loan stretching over “60-70” years taken by one generation to be repaid by the next or something else?

    Chor is a politician. He supports it because he must have figured it will help developers and the housing market and construction industry, one of the main pillars of domestic economy. It also helps the other pillar, the banking industry as banks leverage on Malaysians’ high savings to make money which requires coming out with more ingenious methods of marketing loans. Then Chor has to look at the social responsibility side and he thinks from this angle too it’s Ok because this 2 generation loan will help home ownership. Such a loan is probably for 1st time home ownership, and not for speculative business or investment purposes. This being so there is commitment on the borrower part to repay the loan. After all he is staying in the house.

    However back to the Question: what is this “2 generation loan”? The Bank that has started it is Bank Simpanan Nasional (“BSN”) through its GIROHome loan package, and by criticizing Chor the critics are helping BSN to promote and advertise its package! How it works one has to ask BSN loan marketeers! From the little known this two generation housing loan plan can be jointly taken by parents and their children who must be at least 18-years of age and above. It will facilitate borrowing for acquisition for homes in the sense (I think) the two parents if old could not borrow a loan stretching beyond their productive or natural lives but since their children from 18 onwards (the threshold for contractual competence) are expected to live longer and be productive to repay, they are roped in as joint borrower where alone and singly each child could not meet the credit eligibility for a mortgage loan to buy the house. So it sounds that synergizing the strength of the old (with some savings to pay the unfinanced portion of the purchase price) against the strength of the younger children who though lacking the seed capital of their parents have the advantage of years ahead to repay the protracted loan (which their parents do not have). It sounds like synergizing the strength of the old and the young and downplaying their respective weakness so that together parent and children would qualify for a loan – for home ownership of the young) that individually neither parent nor children alone could qualify for such a long term loan.

  10. #10 by Jeffrey on Saturday, 23 October 2010 - 7:01 pm

    Continuing from precediong post :

    What has this 2 generation loan (exactly) then got to do with the “high household-debt to Gross Domestic Product (GDP) ratio of 78% (RM 561.5 billion)” that Rafizi talked about?

    The tendency to borrow on credit to buy all kinds of thing is a bad thing that leads to bankruptcy, that’s true, but if such a bad culture subsists, does it mean that it will necessarily or exponentially be aggravated or encouraged by this “2 generation loan” as structured by BSN above (for 1st home, I presume)?? Come on, are we saying that encouraging home ownership and stretching to repayment of the loan from maximum of 30 to 60 years is necessarily a bad thing? After all the joint borrowers can, if they have funds, redeem the loan anytime (say) 10 years from disbursement of a 60 year 2 generation loan.

    The issue is when they ask for the redemption statement and sum from the lending bank in 10 years time, is this bank going to say that for the first 10 years no installment paid so far is appropriated towards reduction of principal sum and then further lump into the redemption sum the interest for the remaining 50 years of the loan (that they contracted to have) even though they have used the loan only for 10 years???

    If so of course the young will get a bankrupt and it is the bank that makes them so due to regulator Central bank not telling and directing the bank not to calculate redemption sum that way!

    Rafizi talks about inflation and how the RM gets small over 60 years and how If the loan is stretched to two generations, they (family) will be paying two to three times the amount of a house bought 60 to 70 years ago. It is strange that Rafizi does not take into account that precisely because of that inflationary pressure the house in 60 years time may have appreciated certainly more two to three times its original cost of acquisition!

    Is this “2 generation loan” recommended by Chor a fit and proper subject to shoot him & BN that it is encouraging debt and promoting bankruptcy of next generation – when what and how this “2 generation loan” work is quite fuzzy and not certain???

    I cannot believe that “2 generation loan” simply means one generation borrows and next generation -their children- repay to their financial ruin. That cannot be done – because a parent’s liability/obligations just can’t be transferred to their children who have not assumed the contractual obligation of the borrowing! – unless we mean it in BSN’s GIROHome loan way of structure (which is no big shake or innovation if it just means joint, instead of individual borrowing by parents and children).

  11. #11 by Loh on Saturday, 23 October 2010 - 7:33 pm

    ///Petaling Jaya, Oct 23 – Housing and Local Government Minister Datuk Chor Chee Heung has urged house buyers to sign up two-generation housing loans so that more Malaysians can afford to own houses.

    “The most important thing is for the individual to own a house for his family to live in. If loan repayment is extended to the second generation, that means the family will remain intact,” said Chor yesterday after launching the Malaysia Building Society Bhd’s Ultimate Mortgage programme on Friday (Oct 22).///

    Whether Malaysians can afford the housing loan does not depend entirely on the duration of the loan. The longer one pays, the more one pays in interest. The low interest rate is one of the reasons for housing bubbles; house price simply goes up. With the longer term for repayment as norm, those who are not able to own homes at current 30-year term could possible join in the house chase. Pretty soon those who are within the earning capacity to afford a lower monthly repayment because of the extended loan period may find that house prices force them out of market again. By then the government will have to have a 3-generation loan scheme. Housing developers and those who approve housing projects will no doubt be happy to cash out their earnings.

    Government housing loan started with repayment scheme of 15 years at 4% interest. The interest now stays at around 4 percent. If 60 years is the intended repayment scheme, it means that income level of Malaysians versus house and property prices is only one-quarter of what it was 40 years ago. Malaysia does not have to reclaim land for housing. Malaysians have simply become poor. That is gift from UMNO.

    Yes, the family can become intact if they choose to live together with ample space. If the same living space is to be shared for more generations, they will live very closely indeed. They will live even more closely when they have no walking space between one another.

    Corruption has made housing dear. The discount given to bumiputras is another cause of higher housing price. With discount Bumiputras now enjoy 60-year advantage. That certainly is unconstitutional.

  12. #12 by AskChong on Saturday, 23 October 2010 - 8:42 pm

    Did any one do the math? Mortgage for 30 years and 40 years does not make a significant at all.

  13. #13 by TheWrathOfGrapes on Saturday, 23 October 2010 - 10:29 pm

    /// Rafizi said it was the first time he had heard of a government endorsing a two-generation loan, adding that it has never happened in the USA, Europe or even in the South East Asian region. ///

    This is nothing new in Malaysia. Remember the “social contract” that was verbal and unprovable? Even if there was a social contrade, a trade off giving first generation non-Malay Malaysians citizenship and Malays’ special rights – shouldn’t this be restricted to the first generation? Subsequent generations are Malaysian born of Malaysian parents – what trade off do these 2nd, 3rd, 4th, 5th, umpteenth generation non-Malays get from the Malays?

    The mortgage has already been paid in full by the first generation. Or is this a perpetual mortgage – not just a 2-generation mortgage?

  14. #14 by boh-liao on Sunday, 24 October 2010 - 1:57 am

    Every citizen will eventually b squeezed n exploited fr cradle 2 grave by UmnoB/BN

  15. #15 by passerby on Sunday, 24 October 2010 - 6:20 am

    If you need two generations to pay for a stupid house, the economic situation of the country must have deteriorated worse than you thought. All these subsidies, corruptions and white elephant projects have to be paid from your hard earned money.

    Instead of seeing your hard earned money becoming banana notes, I think we should be wise to put them overseas like in Singapore. After all, all the ministers are putting their money overseas and why not us?

  16. #16 by House Victim on Sunday, 24 October 2010 - 7:08 am

    “When asked if Malaysia could face another property bubble like USA, he said, “The risk of a property bubble is not that high. Currently, our banking industry’s re-mortgage facilities are still tightly regulated as compared to America.”

    What kind of “tight regulation” does Malaysia has that is better than US?
    Especially when they are under sleeping BNM and MOH?

    How many mortgages gone to abandon projects? Delayed Delivery? Quality problems? Condo without facilities, or, Common Facilities into pockets of the Developers?

    Why Condo-style living can be advertised and sold when project was approved as Condo? Even until now!! Meaning a lot is selling at inflated price with facilites, such as Club, paid by the buyers, but “confiscated” by the Developer as their’s? Will the Penang Government care to look into such basic matter?

    Who will really care for the Rights of the House Buyers?

  17. #17 by raven77 on Sunday, 24 October 2010 - 8:18 am

    Hmmm…why stop at 2 generations….we can even start talking about 10 generations….

    Isnt debt, incurred directly or indirectly, knowingly or unknowingly, by method or by design…absolutely evil…..didnt mummy teach you that?

    But coming from the MCA led by a porn star….nothing really surprises the public anymore…

  18. #18 by Jeffrey on Sunday, 24 October 2010 - 9:13 am

    ///Isnt debt, incurred directly or indirectly, knowingly or unknowingly, by method or by design…absolutely evil…..didnt mummy teach you that?/// – #15

    Mummy hasn’t figured out the scenario of what many of you say about BN bankrupting the nation or the Ringgit falling in value by hyperinflation.

    If the scenario unfolds in that direction, then borrowing today $1 million from the bank when interest is relatively low and putting your own $1 million in (say) S’pore to protect its value makes sense.

    If you are required to repay the borrowed money of RM1 million back to the bank then that RM 1 million, after depreciation of currency is less in value than that when you first borrowed.

    And if you have first borrowed through a double generation loan to finance the acquisition of an asset like a house, that asset would have gone up in value owing to the hyperinflation which you could then sell without losing that much (if not actually profit) unless there is by then a national crisis and slump, rampant unemployment and asset deflation.

    In that latter scenario you still have your monies overseas, you could bring some back to repay after negotiating haircut from the bank (directed by govt to go easy on “distressed” borrowers, in order not to be sued for bankruptcy.

    In case the bank itself got bankrupted in that scenario, maybe you don’t even have to pay back the full amount….

    The conventional wisdom that you must not borrow and incur debt may not apply in a fast deteriorating economic situation or in a forseeably risky political situation aggravating the economic if assuming that the ruling coalition refuses to pass over the reins of power if it loses in an election.

  19. #19 by boh-liao on Sunday, 24 October 2010 - 10:18 am

    MCA kakis r oredi happily sucking $$$$ fr UTAR Kampar campus students – guaranteed rental made in heaven, since no cheap alternative accommodation available there
    UTAR MCA parasitic tycoons turned down d donation of a philantrophist 2 build hostels
    Of cos, expect CCH n CSL 2 endorse dis 2-generation home loan policy

  20. #20 by Loh on Sunday, 24 October 2010 - 10:30 am

    ///By The Malaysian Insider

    Umno delegates have left no doubt they saw the Malay agenda as a better tool to recapture Malay votes over party president Datuk Seri Najib Razak’s 1 Malaysia policy at the end of the party’s annual assembly yesterday.

    Umno and its Barisan Nasional (BN) allies only won two million out of the five million Malay votes in Election 2008 but a succession of delegates focussed on the need for more incentives to attract the community’s support — now split among Umno, PAS and PKR.

    Najib agreed with them, saying BN component parties had agreed that they will no longer question “sensitive issues” which were enshrined in the Federal Constitution.

    “They have given their agreement that matters pertaining to the constitution should no longer be questioned by anyone at all because I have explained them in detail,” the prime minister told reporters at the end of the four-day assembly here.

    Asked whether all BN member parties have reached a consensus on this, Najib replied, “I would imagine they should agree because this is what I have said and as chairman of BN, this is the spirit of BN, and it is quite academic for us to question the provisions of the constitution.”

    In his policy speech on Thursday, Najib, said the position of the Malays and Bumiputera as well as the interests of the other races in terms of politics, had been enshrined as a national social contract in the Federal Constitution, and everyone must now respect this consensus for the sake of the country’s continuity and survival.

    The Umno president also told his party colleagues that they had to publicise their success in raising wages for the pre-dominantly Malay civil service, who number 1.2 million, and key officials such as village headmen.///–

    Najib left no doubt that UMNO only wants to be in power. To them, democracy through voting has been turned into a perfect game. UMNO knows neither justice nor shame.

    Under NEP, government service should by now reflect the racial composition in the country. Thus, out of 1.3 million civil servants, Malays should number 720,000. But there are 1.2 million, 500,000 more than the number envisaged by NEP. UMNO having spent 40 years implementing NEP has in fact made the situation wprse. UMNO jelly picks the objectives of NEP just like it selectively applies laws in the country to meet its desire to remain in power. For example, the salary increase in the public sector is meant only to benefit Malays, and UMNO hopes that they would vote UMNO. Najib declared his displeasure that civil servants bite the hand that feeds them. It proves that government policies are about getting UMNO in power. UMNO does not respect the constitution as it should if they had accepted 1Malaysia in pursuance of the spirit of the Constitution. But, they declare with no shame that ketuanan Melayu would bring it more votes to UMNO, without a care whether that was constitutional. There are just like thieves, or members of secret society who bully to get money without a thought of what a Muslim should behave. Indeed why waste time praying to God?

    Kerismuddin said that Malays are inclusive because Malays accepted Mamaks, Turks, Bigis, Bangladeshi, and Javanese, Arabs and other mix-blood individuals or pure foreigner Muslims as Malays. Kerismuddin has just confirmed that the term Malays as appearing in the constitution does not belong to a race as the constitution would want us believed. Malays is just a group of people who are members of UMNO. What is common about them is that they are willing to collectively rob others in the country. UMNO is inclusive in accepting other Muslims who aspire to join the group. To qualify they should knows no justice, practise the religion in name to qualify as members of the club. Together through voting they would exploit the loophole of the constitution to enrich themselves. So the talk of defending Malays’ right is now clearly shown to be defending UMNO rights. Only non-Malays of the BN component parties are pretending to be stupid to enrich themselves. Chinese and Indians should accept the guarantee given by PAS and PKR that they will protect non-Malays against UMNO members should there be perpetrators who want to cause trouble, and vote out BN in GE13. Indeed, if they followed the 1969 practise of burning cars on the street, then they should go for the most expensive so that it would have more impact.

  21. #21 by Loh on Sunday, 24 October 2010 - 10:37 am

    ///And if you have first borrowed through a double generation loan to finance the acquisition of an asset like a house, that asset would have gone up in value owing to the hyperinflation which you could then sell without losing that much (if not actually profit) unless there is by then a national crisis and slump, rampant unemployment and asset deflation.///– Jeffrey

    The Americans made that a national sport until August 2007. Unlike Hongkis who were willing to hand on to their assets despite negative equity soon after 1997 financial crisis, Americans are practical, and quite like UMNO members who know no shame, they walk off their loans. That is why the subprime loans collapse so fast, and so easily.

    The two-generation loan scheme is subprime loan in another name; it is family intact loan.

  22. #22 by boh-liao on Sunday, 24 October 2010 - 10:44 am

    Now, NR, freshly strongly endorsed by racist MMK n sensing dat PR is undergoing its ritual self-implosion, is mighty confident of winning d next GE which will b called soon in 2011

    Furthermore, NR n Moo r so very proud of an official request 4 M’sian universities 2 set up branch campuses in Guinea, Africa – a boost of confidence n a seal of approval
    They will dispatch our world famous Dr R Tee 2 b d VC of a M’sian U branch campus there
    Jib, jib, hooray; jib, jib, mooray! Who says our local public U no world class?
    Got people want leh, jealous no?

  23. #23 by Taxidriver on Sunday, 24 October 2010 - 10:47 am

    Mega projects and mega corruptions is the reason ordinary rakyat need ”Two-Generation Home Loan” To the rakyat, it means the UMNOB/BN has failed them!

    With FDIs hesitant to invest in and local investors moving to more secure and investment-friendly countries like Thailand, Vietnam, Indonesia, China ….. can our local banks sustain giving out 100% Housing Loan and recovering the Principal Sum over a period of say, 50 years? Will the interest earned be enough to cover depreciation of the Ringgit. And once inflation hits hard, that’s it! Not only the rakyat will be bankrupted, but Malaysian banks will go BUST too.

    I would suggest a safer way to help rakyat to own homes is for those UMNOB/BN leaders and UMNOB elites who have millions and billions parked in countries outside Malaysia to bring them back and lend out to the poor Malays and non-Malays interest-free to atone for their sins. What more those money is ”tidak halal” They cannot keep; give back to the rakyat like the mak ciks and pak ciks who gave back their RM 100 notes to the Penang State Government.

    And while on the subject of the ”tidak halal” RM 100 notes, has the collected money been given back to the Penang government?

    Having said that, UMNOB/BN need to serve the rakyat and not themselves. Learn from the PAP government in Singapore and stop all your bullshits. If you UMNOB/BN had done that from the last few decades, which rakyat needs ”Two-Generation Housing Loan?

  24. #24 by Jeffrey on Sunday, 24 October 2010 - 11:14 am

    We must also ask who by power of regulation dominates by preponderance ownership of local banks here and who indulges in poor credit culture before we examine whether we should be ashamed like Americans to walk off the loans.

  25. #25 by Jeffrey on Sunday, 24 October 2010 - 11:43 am

    Of course one can raise the countervailing argument that banks are custodians of public funds/savings but are the banks doing their prudential duty of safeguarding them when they lend millions and billions to crony related deals and when times are “good” they persuade us ordinary people to take their money for double generation and when times are “bad” when we need most time for rescheduling, they take away the “umbrella”, ask for top up, call default and force sell our security/assets at ridiculous prices whilst selectively give more time to those of certain political connection???

    When in ordinary times and many cases per the way the bank’s treasury fund matching works, in the case of fixed term loans they hold the ordinary borrowers to their contractual obligation to borrow (say) for 50 years, calculate the interest for 50 years into repayment installments amortised and making a borrower, prepaying the loan earlier in (say) 10 years or 1/5 of the time, to pay and bear a substantial part of loan interest for the remaining 4/5 of time of loan tenure contracted but not actually used by reason of early redemption on the 10th year???

  26. #26 by raven77 on Sunday, 24 October 2010 - 12:42 pm

    Looks like its a good time to rob the banks via “property” while hiding your cash overseas…..Indulge in a little “share market gambling/speculation”….not a bad idea to “play” the banks who have been getting away “playing” the whole country……but not so sure its good for the country’s long term economy….

    But if its a strategy to bankrupt the nation indirectly to effect political change….then…not a bad idea at all…..but you need deep pockets to “hold” ….not to mention you have to find ways of getting rid of our IC and insolvency departments….otherwise get prepared for your grandkids to be already registered in credit rating agencies now itself….

  27. #27 by waterfrontcoolie on Sunday, 24 October 2010 - 1:01 pm

    Without doubt, MCA will even give away the Ministry Of Transport to preserve the Ministry of Local Gomen and Housing which technically speaking has no real functiion except endorsing housing projects. Umno is closing an eye to this, as the housing industry is guaranteed to enslave the Average Malaysians for two generations as nuch as the Toll is designed likewise. The procedures to start a housing development is planned to cause delays which can only be moved if tons of grease is applied to the correct holes.
    Malaysians have been taken on this ride from time immemorial, eg. when the price of steel goes up by $1 k, the devlopers will seek price increase of tens of thousand to justify the increase, invariably, the Gomen will approved; knowing very well there is no justification because on a 2-storey terrcae house the average amont of steel bar used is less than ONE TON! The same philosophy applies to cement anf so forth. Hence, we have a gomen working hand in glove with their cronies to ENSLAVE Makaysians for eons to come! Malaysians have your choice!!!

  28. #28 by boh-liao on Sunday, 24 October 2010 - 1:34 pm

    Of cos, CIMB Bank Berhad n CIMB Group will benefit richly

  29. #29 by grkumar on Sunday, 24 October 2010 - 5:10 pm

    There is nothing that government can or ought to do that would lawfully alter the mess that resulted from the collapse of numerous privately funded residential development projects across Malaysia.

    The first and best thing to do would be for government acting responsibly to order an investigation into each of these failed developments and to bring to book those developers and banks acting negligently in these projects to account. So far all parties have been sitting on their hands whilst developers walk away having squandered hundreds of millions of investors and prospective purchasers monies.

    The legislation in Malaysia relating to residential housing developments, developers and licensing lacks proper definitions to terms or structure therein. These defects in legislation make it impossible to charge any of these so called ‘developers’ under the law for their failures in completing their obligations under the various agreements with purchasers or to provide proper remedies to the thousands of victims of developer fraud.

    Debt is not such a bad thing if the end result is an appreciating asset or a valuable asset that forms part of the savings of individuals a families. To this extent a long term mortgage is better than rent and because they are not making land anymore (Will Rogers) land values will only increase. (they may fluctuate with market conditions in between).

    What is needed is collective action to take on the banks who do not have a right to those monies they continue to collect from investors in these projects where the projects have not been completed and the banks allowed contractors and developers to draw down facilities to which they were not entitled to at law and in equity.

    There are powerful groups and individuals behind many of these schemes. It is not simply something government alone is capable of fixing unless and until victims of these schemes litigate and issue process against the developers who have defrauded them.

    Ther eare remedies at common law and remedies against the banks as well as intermediaries that made representations that victims relied on in these schemes.

    If the truth be known much of Malaysia’s legal fraternity is itself in the dark over such issues.

    There is a website and forum dealing with issues run by a professor of UIM which can be accessed.

    • #30 by House Victim on Monday, 25 October 2010 - 11:33 am

      “There is nothing that government can or ought to do that would lawfully alter the mess that resulted from the collapse of numerous privately funded residential development projects across Malaysia.”
      Collapse of housing projects has been on going for the last 30 or more years in Malaysia. The Development Act (HDA), Strata Title Act (STA) had been amended numerous time with the saying of improving but in fact providing more power for the Authorities but unfortunately without specifying the obligations of the Authorities. And, at the end, with the ignoring of their Duties, the Developers have more chances of escaping from what should be. Finally even come with a nonsense Building & Maintenance Act without mentioning even the STA and HDA. 3 Acts in 2006 for Housing when Singapore had consolidated under one Act in 2004.

      HDA and STA has provided the Authorities with power of rectifying such as the Developer Account to which the Developer has to deposit some amount to MOH in case MOH finds some violation of the Developer. Unfortunately, the amount is not commersurate with the size of the project and MOH HAS NEVER serious on acting onto the Developer. MOH has the obligations and power to monitor the progess and quality of the projects including their Local Government to approve and monitor. However, they NEVER serious in doing so. Or, rather provide nonsense excuse when they are asked to do their jobs! They had amended the Act giving then even the Tribunal Court with power of even sending offender to JAIL and the power to the Minister even being the FINAL said in Housing Project. When project collapse, ONG KA TING said it was not his jurdiction because it was a Service Apartment!! or Gated Community!!

      Those 2-3 Acts were in fact derived or co-related with the National Land Codes, Town and Country Planning Act, Street, Drainage and Building Act, Local Authority Act, etc..

      The Housing Department or a Department in the Municipal was to certify the progress of the Project so that the Developer can get the installments and the OC was to provide a verification of quality and the fulfilment of approval terms before the purchaser should pay the last 10%, etc.. But, in many case, a half way collapse project can found house buyers and their bank paying at least 90% of the price. OC issued when houses are having numerous quality and facilities problems.

      The Transfer of the Strata Tilte and the Transfer of the Managemnet to the Management Corporation are the final duty of the Developer. They are specified under the Housing Act and the Strata Title Acts with a time frame to meet. But, many of these are manipulated by the Government officials to help developer to escape from their duties, but having “document” for installments and continue to hold onto the Management so that the Developer can easily manipulated the Management of the housing project with unreasonable charges but lousy or problematice management with abusing of Rights and manipulation of Accounts. The Management Corporation under the STA should be monitored by the Director of Land, and, later a special section of the Land office. But, it never materialized!! Or, the Director of Land never bother to monitor!!

      The Wangsa Baiduri case in Subang Jaya is a typical example of how the Authorities has been ignoring their duties and ending up with a project with that deviated much from what they were approved with numberous abuse and violation by both the Developer and the Authorities, including the State and Local Land Offices and the respective Municipal Goverment – MPPJ, MPSJ.

  30. #31 by DAP man on Sunday, 24 October 2010 - 9:02 pm

    A good project to make, developers and banks filthy rich.

    There will be many loan defaulters, many auctions and many bankruptcies.

    Just ask any of your friends who live in small towns. Most of their children leave home immediately after their SPM and those who are studying overseas may not return home. Those who start work earn less than RM 2,000 a month.

  31. #32 by elmoworld on Monday, 25 October 2010 - 1:25 am

    Chor Chee Heung!

    I think you should resign. You are just another money sucker.

    You are not helping us. Heartless cornman.

  32. #33 by Bigjoe on Monday, 25 October 2010 - 10:11 am

    This suggestion is so embarassing, I really don’t know how to explain to other people about it. Its got ‘Ah Pek’ written all over it. Seriously, it reeks of old idea regurgitated and smells very badly.

    If this is the kind of solutions they come up with, I dread what they are thinking in terms of education, in terms of crime and social ills, healthcare etc. Seriously, this sound like something that old family uncle or auntie who think too highly of himself and spout nonsense suggestions that angers everyone at family gatherings.

  33. #34 by grkumar on Monday, 25 October 2010 - 12:26 pm

    Singapore may have its own laws as do many other countries that have their own laws that are specific to such undertakings. We are talking here about Malaysia and its problems in residential development and their many failures. What needs be done cannot be achieved under prevailing legislation for the reasons I have articulated here already. If one wants to get something going, there is the common law and in particular contract under which there are remedies that may be pursued against errant, recalcitrant and defaulting developers and contractors.

    Government here like in Singapore and elsewhere will attempt to isolate their liability with ‘crown immunity’. Its easy and convewnient when the problem exists on such a large scale.

    It becomes inconvenient when the scale of the problem is revealed with properly organized litigation and individual culprits are pursued. When the heat is on them they will point fingers at others further up and so on. But at the end of the day government is not the lender of last resort to private sector operators unless the DAP has changed its stance.

    • #35 by House Victim on Monday, 25 October 2010 - 2:07 pm

      Much of the Malaysian laws were based on the British and later on the Common Wealth. For housing, much are modified or with reference to the Australian. Same for Singapore.

      Why for a housing matter, it cannot be at least sychronized into one simpler law but making into even 3 when the first two already look and work awkwards. Why purchaser and proprietor? Why purchaser cannot have saying on the management until they are proprietor. etc… Why Management Corpoation but need not to be incorporated??

      Much can be done and have to be done if the Government are making laws for a fair handling of KNOWN problems. Many had been made or amended with the sake of BIAS or escape of responsibility. Why not pushing for a prompt issue of Strata Title and running of MC instead of a Building and Maintenance Act? When the later has even looser stipulation of the Duty of the Developer and the Management!!

      Much can be found that the Malaysian Government with the power of those Housing Acts and related had not done their minimal duties in following the laws. And, in many cases, as illustrated by the Wangsa Baiduri case, they are the one abusing the laws, neglecting their duties. A collective violation and not negligence!!

      A Government should do according to Laws, Rules and Regulations and at least be fair to the house-buyers? And, not to handle things only politically.

      The liabiltiy of a Land Office, Municipal Council should not deviate with the change of Governmentship if they care to see things from the point of LAW. If DAP cannot stand firm on this point, even if DAP can get on with his Governmentship in Penang or else, this will not encourage foreigner to come!!

      A Condo is a Condo and should not be look-like, sound-like, but work not so!! Espeically, it is the price of a Condo that the house buyer is paying!!

      “Crown immunity” is for unintended negligence and not for intended, purposely done illegal or overriding rules and regulations. especially when they had gone through multiople steps of violations. The Kampung Bala case is a good example where those CEO approving the matter during the BN time should personally be responsible and not under Crown immunity. Same for Subang Town Park and Wangsa Baiduri. A stolen property is a stolen property!!

      When the Housing Development Act came into force without specifying Service Apartment or Gated Community. The Housing Act should include all these. Same for the land or strata title matter.

  34. #36 by House Victim on Monday, 25 October 2010 - 1:02 pm

    Voliations and Ignorance of the Developer and the Authorities on Wangsa Baiduri Project
    1. The land was part of the Water Retention Pond/Town Park for Subang Jaya – violation of the TCPA, NLC, DBA, LGA, ….The land was alienated to PKNS after the complete of Subang Jaya by Sime UEP and used as Joint-venture with Emko. Most of the land for the Water Retention Pond, also being the Town Park for Subang Jaya was issued with a Title to Sime UEP. Balance of the Water Retention poind were used for other projects, including the SMC….hotel,…..
    2. The land for the Cub House of the project was transferred from PKNS after the Townhouse for Wangsa Baiduri was sold and before they were sub-dived. Violation of NCL, HDA, STA, TCA, etc..
    3. The Titles of the Townhouse were said to have issued without the Developer handing over the Road within the Project to the Authority. However, MPPJ and later MPSJ were getting Assement from the House Buyers and the Developer was allowed to continue getting Service Charge (=Management Fee) from the Town House Buyers). A contradictions of NLC, LAC, STA..The formation of MC under the law and the Development Act was completely ignored by the Developer and the Authorities – Land and MPPJ/MPSJ. Where in such circumstances, MPPJ/MPSJ and the Developer are having no Rights to the Assessment or Management Fee. And, surely, OC should not have been provided when the Club House was not in the ownership of PKNS and the Developer!!
    4. The Condo Buildings – Spring Villa and Summer Villa were sold as Condo with the Club House (not owned by the Developer but remain in the Developer license renewal from MOH) and Development Order renewal from MPPJ The buildings were sold without Sales and Advertising permit and strict adherance to the mandatory S&P -the Schedule H. Violations of HDA, TCPA,…..
    5. Spring Villa was in fact built only on half piece of land that was approved and required for such building. A contradiction to law requirement and the S&P specification for that building.
    6. The OC of the two building were issued with the Club out of the picture.
    7. The land of the Spring Villa was subdivided.
    8. The Club House and half piece of land was approved by MPPJ into an Hotel. An violation of the master approval, TPC, ……
    9. The land of the Summer Villa was “converted” from Condo to Apartment after 6-7 of the issue of the OC.
    10. The Strata Title was applied with the “converted” title and were approved wihtout verifying the specfications under the Development Order, including the Bumi-putra quota!!
    11. The Strata Title were allowed to be paid and obtained almost a year later but without a list of proprietors!!
    12. The list of proprietors were dragged for 4-5 years before the Strata Title can be transferred. But, it was not approved by the a State Authority but the Economic Committee…
    13. The AGM was allowed to drag for close to a year but allowing non-registered proprietor to vote and elected as Council member of the MC. Audited account was not presented nor done to conclude the balance from the Developer who has raised the Service Charge from 150 to 285/month and another illegal charge of RM30/month for service outside the building but in the Townhouse area, and, a Service Tax (not applicable). Club house was at extra monthly charge.
    14. The area had never been properly managed even after the increase of charge and charges were never proportionated until some years after the “illegal” council was in place. The MC was never properly run by the Council without clear jobs of Treasurer. Management remained with the Developer and later to a Management company without being approved by the AGM.
    15. 3 units of Common Properties for the Building were in the hand of the Developer under separate Title and the Council made a “Deed” to nullify the rightful ownership of these 3 units without proper authorisation or disclosing they are the Common Properties.
    16. MC refused to response to the Complaints and the Complaints to the Authorities were never been replied.
    17. The requirement that the project has to provided the Residents with the respective recreation area has been ignored since its started in 1968 and even with repeated mentioning in each and every re-approval for the building, they had never been materialised when all the possible space were utilized with the last approval in 2007/2008 and had built over 1710 units instead of 1429 units. Changing a half-way abandoned building of 17storey into a 30-storey 325 units.
    HOUSING IS UNDER A NUMBER OF LAWS but they had been ignored and bullied not only by the Developer but the Authorities and Court!

    They are not under the 4-corners of the S&P only (as proclaimed by many many lousy lawyers). But, with ignorance and abuses of the Authorities!!

    For 2-3 generations, this is what has happened!!
    Condo club facilities grabbed by the Developer is still going on!! So, people paying Condo price will get a Condo-Style of living without ownership of the Club!!

    How many houses are built on muddy land or hillside?? On public reserved land that should not be alienated again??

    Laws are there without the ethic of the lawmaking, enforcements and even the possibilities of acting in court in a rightful and fair manner!!

  35. #37 by dagen on Monday, 25 October 2010 - 2:09 pm

    Young malaysian families buy properties with bank loans that has to be repaid by the next generation. Realistically, with inflation and (presumably) growth in income the instalment payments in real terms will be lesser and therefore more manageable in the future. Then again interest payment too would be more for a longer re-payment term. But these are the easy issues.

    What is complicated in the social aspect. Parents who are not prudent or who are foolish could make decisions that impact, negatively, their children’s financial position in the future. Chidren who are less capable than their parents too would suffer the same plight. In fact this final aspect would be a real challenge to the proposal. Besides, such long term responsibility would tend to people down to a particular place. At least until the loan in fully repaid or maybe sooner if the property was sold before the loan repayment runs its course.

  36. #38 by Taxidriver on Tuesday, 26 October 2010 - 12:11 am

    Today we see ah longs’ stickers everywhere. Thirty years from now you will see ‘Bank Lelong’ notices everywhere. Fathers will fight against sons, brothers will fight against brothers. Then Two-Generation Home Loan will have to be extended to 3 generations. Chaos will reign. There will be robberies, murders, car-jackings……., noboby will be safe in Ma Lai Sia. People will gather at cemeteries in the thousands daily to spit at Beh Ah Tee and NAH Kib’s tombstones to thank them for their MEGA PROJECTS and TWO-GENERATION HOME LOAN.

    The above prophecy will not come true if PR takes over Putrajaya this coming 13th GE.

  37. #39 by PoliticoKat on Tuesday, 26 October 2010 - 12:30 pm

    I am amazed that people are defending a 2 generation loan as being cheap.

    Sure there is inflation, but mind you the average Malaysia salary has been nearly stagnant for nearly 2 decades. Furthermore, people seem to forget that loans are not interest free. The interest rate of the loan is far larger than inflation. Ie the longer that you take to pay, the more you have to pay back in real terms.

    Lastly it is sad sad day that Malaysian and her citizens have become so poor that 2 generation loan is being considered.

    And I don’t think this idea really address the problem. Housing is expensive. Rather then think of ways to for people to raise the money to buy houses at ridiculous prices, we should be thinking of ways to reduces the prices of housing. Ie increase the supply, and thus lower the cost.

    As it stands, if we have 2 generation loans, housing prices will soon go higher. And then we will have 3 generation loans and so forth.

    BUt then again this is what we get for NEP social engineering of at least 5 babies for Malays. Mahathir dream of 75 million Malaysians.

    Not enough planing to absorb the millions of youth. You reap what you sow, UMNO-BN. 75million Malaysians was a bad idea when I heard about in Standard 1. And it is a bad idea now.

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