03 July 2020

Central Bank: The framework conditions for issuing mortgage loans to the population have been established

The Regulation of the Central Bank of the Republic of Uzbekistan “On the framework conditions for the provision of mortgage loans to the population” has been approved (registered with the Ministry of Justice on June 30, 2020, No. 3269).

This Regulation was developed in cooperation with experts from the Asian Development Bank based on a study of advanced foreign experience, and contains general terms and conditions for issuing mortgage loans to the population by commercial banks, the press service of the Central Bank reports,

The Regulation defines the areas of mortgage lending, registration stages, analysis of the borrower's solvency and risk management associated with the allocation of mortgage loans.

At the same time, this document reflects the rights and legitimate interests of borrowers, as well as alternative solutions to problems.

According to the regulation, mortgage loans to the population are issued by banks on the terms of payment, repayment, security and urgency, for the following purposes:

• construction, reconstruction and repair of individual housing in compliance with established norms and rules of construction;
• purchase of an individual house or apartment in an apartment building on the primary or secondary markets;
• exchange of your individual house or apartment in an apartment building for houses or apartments from the primary or secondary markets;

refinancing of mortgage loans issued by other banks on more favorable terms for clients.

The Regulation also details all stages of filing an application for a mortgage loan, from the bank providing the necessary consultations to the client until the loan is repaid.

In order to ensure the rights and legitimate interests of the borrower, banks are entrusted with the following tasks:

• free provision of information leaflets to citizens with the main terms and conditions for issuing mortgage loans;
• explain to the client the possibility (or not) of making mortgage loan payments;
• inform the client that he has the right to accept the draft agreement for consideration.

The regulation also gives the borrower the right to independently choose an insurance company to insure the mortgaged property in favor of the bank.

In addition, the document covers in detail the process of reviewing applications and making decisions to obtain a mortgage loan.

This document fully reflects the circumstances that must be taken into account by banks in the process of managing banking risks when issuing mortgage loans.

According to the regulation, banks establish criteria for selecting appraisal companies that evaluate the mortgaged property.

Banks are advised to update the value of the security every three years or in the event of significant changes in prices on the real estate market.

According to the document, the term, volume, interest rate and other terms of the mortgage loan are determined by the agreement between the bank and its client in accordance with the internal credit policy of the commercial bank.

The terms for reviewing documents and making decisions on him.

Source: www.uzdaily.uz