Amendments to edit
The Council for codification and enhancement of civil legislation under the President of Russia has considered the April 18, prepared for the second reading amendments to the draft new wording of the Civil code. The Deputy Chairman of the Council Alexander Makovsky said that the Council will be advocating that borrowers entitled to early repayment of loans, not related to business activities. In current form, the draft changes the law in favour of banks and other credit organizations, says Makovsky. According to him, the Council document there are other comments, just over 100 of them.
Comments of the Council are recommendatory in nature in the Duma are not obliged to take them into account, but in practice it follows the recommendations of the Council. The Chairman of the state Duma Committee on civil, criminal, arbitration and procedural legislation Pavel Krasheninnikov said that the Committee will finalize the bill taking into account received from the Council comments. “We will finalize the document, to discuss it with all parties, including the Ministry of Finance, Central Bank and others”, — said the Deputy.
The bill, known as the new edition of the Civil code, was submitted to the Duma by the President in 2012, adopted in first reading and now the profile Committee has prepared amendments for the second reading.
One prepared for the second reading of the amendments drew the attention of bankers: Association of Russian banks (ARB) on April 14 sent a letter to the head of the state legal Department of President of Russia Larisa Brycheva, which expressed concern that the proposed revision of certain articles of the Civil code deprives mortgage borrower “of the right to early repayment of the loan without the consent of the creditor”. Currently this right is enshrined in the code, said in the letter. As explained by the Vice-President of Association of regional banks Oleg Ivanov, if a new version of the code will be adopted in this form, the early repayment of mortgage loans will be possible only with the consent of a creditor for consumer loans exceptions remain.
“I don’t think this story emerged because of the mistakes of the legislator, because the amendments were preparing for four years. Perhaps it is the “billet” major mortgage lenders. We can talk about their desire to move to the German model of regulation of the mortgage. In Germany early repayment of mortgage loans without the Bank’s consent is forbidden, which enables it cheaper to refinance themselves by issuing long-term mortgage sheets,” — said Ivanov.
Once published this information, Krasheninnikov has declared that the Duma has no plans to ban early repayment of a mortgage: “There’s no such amendments. Today we specifically tested… This we have in the project there can be. Early repayment is no violation. It’s obvious”.
But in the amendments, the possession of the ARB, such an item is: “the Amount of a loan interest may be returned early with the consent of the lender, including the agreement expressed in the loan agreement” (article 810 the code). The current version of the Civil code gives the borrower the right to early repayment of all borrowings, not related to business activities. The only condition for early redemption is a “notice” of the lender not less than 30 days of the date of early repayment of the loan.
As RNS said the first Vice-President of ARB Yuri kormos the author of amendments “forgot” to make this provision in the new version of the law. We are talking about paragraph 2 of article 810. “That part is excluded. If you remove this part, the Civil code remains only the possibility of early repayment of the loan with the permission of the lender. Thus, for consumer credits there is a special norm provided by the law “On consumer credit”. And for mortgage loans there is no such provision. It turns out that the Civil code does not provide special regulation of mortgage lending, said kormos. — We believe that this omission, on which will pay attention when you will be accepted the amendments. This part must be adjusted either in the law “On mortgage”, or leave the existing article”.
A useful option
According to the Central Bank, on March 1, Russia issued ruble mortgage loans for 3.9 trillion rubles (currency — 175 billion rubles). In the first half of 2015, according to the Agency RAEX, the share of state banks in the mortgage market was 86%. Sberbank increased its share in the total volume of loans to 66% compared to 51% in the first half of 2014, the Bank of Moscow to 2.2% (from 1.6% a year earlier). VTB24’s share declined from 21% to 16%, Gazprombank — from 4 to 1.7%.
RAEX in its review, noted that the mortgage market helped the program to subsidize the rates. The share of loans issued under this program by the end of 2015 could exceed 50% of the total volume of loans issued, wrote analysts.
First Deputy Chairman of the management Board of the Bank housing Finance Igor Zhigunov considers that in the context of complex financial services market for the population of the restriction on early repayment of mortgages is more a minus than a plus. “Limiting the possibility of early partial or full repayment of a mortgage loan is a violation of the rights of the user of the credit for the performance of its obligations,” says Zhigunov.
According to the Director of analytical Department of National rating Agency Karina Artemieva as a rule, getting a mortgage, the majority of Russians expect it to be a early repayment: “it’s Good to extinguish a 40-year mortgage at a rate of about 2% per annum, and it is very unpleasant to do so at a rate higher than 12% when the cost of your apartment doubles after seven or eight years at these prices. About four out of ten mortgage borrowers have resorted to early payments”.