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"MIEL-Brokerage" suggested the Federation Council to develop amendments to the law "On mortgage" in part of the early repayment of the loan
a Few days ago a Committee of the Federation Council meeting was held, the theme of which was identified the need to improve domestic Legislation in order to create the most predictable development of the mortgage. One of the participants of the "round table" became Irina Kazhikina, Deputy Director General of the company "MIEL-Brokerage", which proposed the establishment of a working group to respond, said Irina Chaikinoi, for the development of specific amendments to an existing today the Federal law "On Mortgage". In accordance with the proposal made by the amendments are to regulate the banking requirements of a possible early repayment of mortgage loans.
In her report, Irina Kaikini was marked by the fact a large number of mortgage agreements under which financial assets can be issued for the purchase of real estate if they meet the requirements of early payment of the loan, if the value of the collateral will be reduced.
From a formal point of view of the Russian legislation this condition is not violated, since the list of grounds envisaged by the Russian laws, is not final. On the other hand, giving a mortgage for several decades, it becomes quite clear that the value of the property during this period will not remain stable, prices will be up and down. That is, most banks prefer to be reinsured and to shift risks on to borrowers.
According to Irina Chaikinoi, at the moment there is already a precedent, when the Bank made a demand on the need for early repayment of the loan. If this behavior will be repeated by other banks, we can safely assume that the trust as to the mortgage lending and banking structures will erode. And some borrowers will gladly pass on to the Government the whole responsibility for these actions of the banks. According Irina Kazhikina, restoring confidence in mortgage lending after the crisis period may take several years.
The final part of the report contained a proposal to form a working group to develop amendments to the legislation existing today. So, we are talking about the need to regulate the list of grounds, including force majeure, which could allow the Bank to impose requirements about necessity of repayment of the loan or part thereof ahead of schedule and pay for the collateral recovery.