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" was 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 on the basis of studying the best foreign experience, and contains general conditions and rules for the issuance of mortgage loans by commercial banks to the population, the press service of the Central Bank reports.

The Regulation defines the directions of mortgage lending, stages of registration, 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 ways of solving problems.

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

• construction, reconstruction and repair of individual housing in compliance with the established norms and rules of construction;
• purchase of an individual house or apartment in an apartment building in 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 mortgage loans issued by other banks on more favorable terms for clients.

The regulation also details all stages of applying for a mortgage loan from the bank providing the necessary advice to the client to repayment of the loan.

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 conditions for issuing mortgage loans;
• explain to the client about the possibility (or not) of making repayment of mortgage loan payments;
• inform the client that he has the right to accept the draft contract for consideration.

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

In addition, the document details the process of considering applications and making decisions for obtaining a mortgage loan.

This document fully reflects the circumstances that should be taken into account by banks in the process of banking risk management when granting mortgage loans.

According to the regulation, banks establish criteria for the selection of appraisal companies evaluating the subject of a mortgage.

Banks are advised to update the value of collateral every three years or in case of significant price changes in the real estate market.

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

The terms of consideration of documents and making decisions on them should also be made public.

Source: www.uzdaily.uz