The amount of damages for non-performance or improper performance of the borrower-a citizen of the loan agreement, obligations under which are secured by a mortgage, may not exceed 20% per annum, according to the draft document.
MOSCOW, Dec 15. The state Duma Committee on property recommended the lower house of Parliament to adopt in the first reading a bill aimed at limiting the maximum size of penalties in mortgage contracts in case of default by the borrower of its obligations.
The maximum penalty under the mortgage agreements limit is proposed by analogy with the conditions specified in the law “On consumer credit (loan)”. This will allow to protect the rights and interests of citizens and reduce the number of disputes on this issue, explained earlier, one of the authors of the bill, Deputy Chairman of the Duma Committee on ekonompolitike Victor Klimov.
According to the draft law, the amount of forfeit (fines, penalties) for failure or improper performance of the borrower-a citizen of the loan agreement, obligations under which are secured by a mortgage, may not exceed 20% per annum, if under the terms of the contract in the amount of the loan shall bear interest for the relevant period of infringement of obligations. But if under the contract the interest on the loan amount charged, the amount of the penalty shall not exceed 0.1% of the overdue indebtedness for each day of violation of obligations.
Appropriate changes to article 9.1 of the law “On mortgage (pledge of immovable property)”, which determines the particularities of the terms of the loan agreement, the loan agreement, concluded with natural person for purposes not related to business activity, and the obligations of the borrower under which are secured by a mortgage.
The Committee on property believes that the bill will limit the risks of citizens-borrowers ‘ mortgage contracts purchase of apartments and reduce the number of cases where the mortgage foreclosed, that borrower may not, even if there is relatively little delay, to recover the appropriate payment schedule. The Committee thus notes that the penalty amount is 20% per annum higher than the average mortgage rates of about 14%, and consumer lending is about 18%.
In preparation for the second reading, the Committee intends to align the provisions of the bill with the provisions of the law on consumer lending areas, regulating the amount of the penalty and the priority of repayment in case of shortage of funds for regular payment of the debtor.