HOME PROTECTION SCHEME

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HOME PROTECTION SCHEME:

(Compulsory for HDB home owners):

12\. Mdm Cynthia Phua asked the Minister for National Development whether he will (i) make the Home Protection Scheme (HPS) compulsory for Housing Board home owners who are not paying their mortgage through their Central Provident Fund; (ii) provide an update on the number of HDB home owners not covered by HPS who have had to surrender their homes when their sole bread-winners passed away over the past five years; and (iii) provide the reason for not making HPS compulsory for all buyers of HDB flats.

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): The Home Protection Scheme (HPS) protects households against the loss of their flats, should the breadwinner pass away or become incapacitated before the home loan is fully paid.

All flat owners using CPF to service their home loans are required to take up HPS or a similar insurance product. In the first half of 2008, 90% of households

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who purchased a flat with a HDB loan, fall in this category.

For those not using CPF to service their home loans, HDB actively encourages them to take up the HPS on an optional basis. Such households generally have to set aside cash to pay for their HPS premiums. Given that their financial circumstances may vary, HPS is not made compulsory for them.

Over the past five years, no household has had to surrender their flat to HDB because the sole breadwinner passed away without HPS coverage. Most households in mortgage arrears tend to be in financial difficulty due to reasons such as business failure or job loss. HDB provides ample time and assistance for such households to seek a long-term solution to their financial difficulties. For example, HDB may consider providing an additional HDB loan to help the household downgrade to a smaller, more affordable flat.

Mdm Cynthia Phua: Sir, I would like to ask Parliamentary Secretary whether he would consider allowing the HPS to be paid by instalment, rather than on a lump-sum basis because if the household is unable to afford the flats and paid on cash basis because of the salary, then they would be unable to pay a lump sum. So, it will help the household. I have one case – sorry, Mr Speaker, I will be speaking a bit long here.

Mr Speaker: You cannot be too long.

Mdm Cynthia Phua: A family of five children – the husband suddenly passed away in China and the whole household could not have a shelter over their heads.

Mr Speaker: Mdm Phua, you can bring it up as an MPS case. You are not speaking it here.

Dr Mohamad Maliki Bin Osman: Mr Speaker, Sir, we empathise with cases

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such as the one highlighted by Mdm Cynthia Phua. I think the issue that Mdm Phua raised on whether the HPS should be paid or can be paid by instalments or should be made to pay in lump sum. Prior to March 2001, the requirement was that HPS was to be paid in lump sum. But I think there was the recognition that there were difficulties, so my understanding was that post-March 2001, CPF has allowed HPS to be paid by annual premiums through annual payments. And annual premiums are more affordable if they paid annually. Of course, the issue really, is to make sure that the mortgages are able to be continuing paying that annual premiums. The premiums can be paid through CPF or by cash. And the premiums are a lot more affordable for them if they are able to pay annually. And the system allows for that, at this time.