Experts at the President rejected the idea of banning foreign currency mortgage


According to “Kommersant”, the presidential Council for codification and enhancement of civil legislation, criticized the draft amendments made by the legislative Assembly of St. Petersburg to protect borrowers on foreign currency mortgages. Changes suggested to ban mortgage lending in foreign currency and to suspend a foreclosure on a single housing such borrowers to 2020. Experts said about the contradiction of these ideas of the Constitution and the Civil code (CC) of Russia, in particular the principles of freedom of contract and equality of participants of relations.

The Council noted that foreign currency loans cannot be prohibited, and that borrowers should be better informed about the risks. Furthermore, the experts rejected the idea behind the project is to empower the Bank of Russia the right of conversion of foreign currency mortgages in rubles. They stressed that according to GK the right to forcibly change the contract only has the court “taking into account the specific circumstances of a particular case”.

According to the newspaper, in discussing the amendments, the experts put forward suggestions to recalculate the amount of foreign currency loans in rubles at an affordable for the borrower rate. As told those present at the meeting of the Board head of analytical service “Intralex” Olga Pleshanova, the discussion at the meeting called the response of the Professor of St. Petersburg state University Yury Tolstoy, who stressed that, despite the “populist goals” of the bill’s authors, “we need to find a way out,” “not to dismiss the interests of borrowers, taking the position of civil chistoplyuystva” and banks “need to be able to share.”

Head of the Department of civil law of the Moscow state University Evgenie Sukhanov asked why the courts ignore the article 451 of the civil code, allowing to modify or to terminate the contract after a material change in the circumstances which the parties could not have foreseen. Deputy Chairman of the Supreme arbitration court in resignation Vasily Vitryansky supported the application of this article for foreign currency loans in the case of spike rate. He proposed to make direct reference to article 451 of the law “On mortgage”. The presidential envoy in the constitutional court, Mikhail Krotov also admitted the possibility of a change of the loan currency according to article 424 GK based on current rates of rouble loans and real estate prices.

In the text of the Council conclusions following the meeting, however, these ideas were not included. Experts “have limited resources and are unable to give direct instructions to the courts on application of norms of the civil code”, explained Pleshanova. According to the newspaper, the current judicial practice does not consider the doubling of the dollar and the Euro, the basis for changes to the terms of the currency of the credit risks borne by the borrower.

Solution Board announced the restructuring of debts of citizens in the framework of the law “On bankruptcy”. Approval of the restructuring plan “is allowed without the consent of the creditors,” reads the conclusion. If at the end of the period of the restructuring plan, the debtor will not be overdue obligations and he will be able to continue debt payments, its creditworthiness will be considered restored.

Source