R3bn more for Sexwale's mortgage programme

The Human Settlements Ministry plans to inject an extra R3-billion into a new plan to insure the mortgages of 600 000 people, according to its annual report.

The R1-billion "mortgage default insurance programme" announced earlier this year by Human Settlements Minister Tokyo Sexwale would cover the loans of only 120 000 lower- to middle-income earners.

An extra R3-billion would be needed by 2013 for the government to meet its target of insuring 600 000 bonds, said the department’s annual report for 2010-2011, released on Monday.

The new “mortgage default insurance” will help lower- to middle-income earners who are normally turned away by banks when they apply for bonds. Under the new scheme, the government will insure the bonds – and refund banks if the bondholders default on their payments.

Five months ago, Sexwale said the insured bonds would be available through banks from April 2012. The state-owned National Housing Finance Corporation told I-Net Bridge last month that the scheme was “at an advanced stage of development”.

Meanwhile, the annual report revealed that the department had not met several of its own service delivery targets because it was being held up by provincial human settlements departments.

Five unnamed provinces failed to identify their “blocked” projects so that the national department could iron out problems there.

Free State and Eastern Cape “did not respond to repeated requests for meetings” to discuss how the national department could help them speed up housing subsidy scheme projects.

A "national human settlement development plan" had not been drawn up because two unnamed provinces had not handed in their own housing plans.

But the national department was not spared from criticism in its report – it got a clean audit, but with emphasis of matter for R12.1-million in irregular spending – and for failing to spend 60% of the money it had budgeted for rural toilets.

“The department has not achieved certain of its objectives of providing sanitation services to rural communities,” wrote auditor-general Terrence Nombembe.

The Times reported earlier this year that the rural toilet programme had a budget of R100-million last year but by April 2011 had built only 5 600 pit toilets at a cost of R38.3-million.

Parliament’s human settlements portfolio committee said then that Sexwale must cancel the second and third phases of his R550-million contract with the Independent Development Trust, which had been hired to build pit and flushing toilets in 25 rural municipalities.