37 Housing Australia may require repayment and terminate arrangement
Assessment of capacity to repay Commonwealth share
(1) Housing Australia must ensure that each arrangement requires the participant to obtain, and provide to Housing Australia, an assessment by the participating lender of the participant’s capacity to repay the Commonwealth share in respect of the relevant property (as valued at the time of the assessment):
(a) where Housing Australia determines, under paragraph 35(1)(b), that the participant should be required to undergo the process set out in this section; or
(b) in the circumstances mentioned in subsection 36(1) or (2); or
(c) where a further assessment is required under subsection (5), (6), (9) or (12) of this section.
(2) An assessment mentioned in subsection (1) must:
(a) if the Commonwealth share is greater than 5% of the value of the property (as at the time of the assessment)—assess whether the participant does, or does not, have the capacity to repay a minimum amount of 5% of that property value; and
(b) if the Commonwealth share is equal to or less than 5% of the property value (as at the time of the assessment)—assess whether the participant does, or does not, have the capacity to repay the Commonwealth share of that property value in full; and
(c) be obtained within the period determined by Housing Australia and notified, in writing, to the participant.
(3) In determining the period under paragraph (2)(c), Housing Australia must:
(a) consider the participant’s personal circumstances and financial capacity; and
(b) consider the reason, or reasons, why the participant was required to obtain the assessment (including, if the assessment is a further assessment, the reason, or reasons, for the previous assessment); and
(c) where the assessment is required because of subsection (5), (6), (9) or (12)—set a start date for the period that is not less than 12 months after the previous assessment.
Example: If Housing Australia has dealt with an arrangement under this section because the participant’s taxable income exceeded the relevant threshold as set out in section 34, Housing Australia must consider the extent to which the participant’s taxable income exceeded that threshold.
Arrangements must allow Housing Australia to require repayment of Commonwealth share
(4) Housing Australia must ensure that each arrangement allows Housing Australia to require the participant to repay the Commonwealth share in full or in part in the circumstances specified in this section.
Commonwealth share greater than 5% of value of property
(5) Where:
(b) the Commonwealth share in respect of the relevant property is greater than 5% of the value of the property (as at the time of the assessment); and
(c) the participating lender assessed the participant to have the capacity to repay a minimum amount of 5% of that property value; and
(d) Housing Australia is satisfied that the assessment was properly made;
Housing Australia, under the arrangement:
(e) must require the participant to repay that minimum amount (rounded to the nearest $1,000) within 90 days of the date of the assessment; and
(f) may allow the participant to repay more than the minimum amount; and
(g) where the Commonwealth share percentage of the relevant property, re‑calculated by Housing Australia to reflect a payment mentioned in paragraph (e) or (f) (as applicable), is greater than 0%—must require a further assessment under subsection (1) to be undertaken; and
(h) where the Commonwealth share percentage of the relevant property, calculated by Housing Australia to reflect a payment mentioned in paragraph (e) or (f) (as applicable), is 0%—must terminate the arrangement.
(6) Where:
(b) the participating lender has assessed the participant not to have the capacity to repay a minimum amount of 5% of the property value; and
(c) Housing Australia is satisfied that assessment was properly made;
Housing Australia must require a further assessment under subsection (1).
Example: If Housing Australia is satisfied with an assessment that a participant does not have the capacity to repay the minimum amount, the participant need not make a repayment, but will be required to obtain another assessment at a later time determined by Housing Australia.
(7) Despite anything else in this section, Housing Australia must not require, but may allow, a participant to repay an amount if repayment of that amount would render the participant liable to bear the cost of lenders’ mortgage insurance.
Note: The participant may become liable to bear the cost of lenders’ mortgage insurance if, for example, they borrow further funds from their participating lender in order to repay the Commonwealth share, and this results in them borrowing more than a certain percentage of the property’s value from that lender.
Commonwealth share equal to or less than 5% of value of property
(8) Where:
(b) the Commonwealth share in respect of the relevant property is equal to or less than 5% of the value of the property (as at the time of the assessment); and
(c) the participating lender has assessed the participant to have the capacity to repay the Commonwealth share of that value in full; and
(d) Housing Australia is satisfied that the assessment was properly made;
Housing Australia, under the arrangement:
(e) must require the participant to repay the Commonwealth share in full within 90 days from the time the assessment is made; and
(f) terminate the arrangement when the repayment in full has been made.
(9) If:
(a) the participating lender has assessed the participant not to have the capacity to repay the Commonwealth share of the value in full as mentioned in paragraph (2)(b); and
(b) Housing Australia is satisfied that the assessment was properly made;
Housing Australia must require a further assessment, as mentioned in subsection (1).
Example: If Housing Australia is satisfied with an assessment that a participant does not have the capacity to repay the Commonwealth share in full, the participant need not make a repayment but will be required to obtain another assessment at a later time determined by Housing Australia.
Note: The participant may repay the Commonwealth share by, for example, borrowing further funds from their participating lender, or using their own savings or assets.
(10) Despite paragraph (8)(e), Housing Australia must not require, but may allow, a participant to repay the Commonwealth share in full even if this would render the participant liable to bear the cost of lenders’ mortgage insurance.
Note: The participant may become liable to bear the cost of lenders’ mortgage insurance if, for example, they borrow further funds from their participating lender in order to repay the Commonwealth share, and this results in them borrowing more than a certain percentage of the property’s value from that lender.
Housing Australia may not seek repayment in certain circumstances
(11) Housing Australia may choose not to enforce a requirement for a participant to repay an amount as set out in this section if Housing Australia considers it reasonable in the circumstances after considering:
(a) the participant’s personal circumstances and financial capacity; and
(b) the reason, or reasons, the participant was required to obtain an assessment of their capacity to repay the Commonwealth share in respect of the relevant property.
Example: If Housing Australia has dealt with an arrangement under this section because the participant’s taxable income exceeded the threshold as set out in section 34, Housing Australia would consider the extent which the participant’s taxable income exceeded the threshold.
(12) Where Housing Australia chooses not to enforce a requirement for a participant to repay an amount as set out in this section, Housing Australia must require a further assessment, as mentioned in subsection (1).