The Budget Committee within Romania’s Senate rejected yesterday most of the amendments that Romania’s National Bank (BNR) suggested to the new law on mortgage loans.

The law on giving in payment, initiated by the MP Daniel Zamfir, allows the mortgage debtors to get rid of their debts to banks by giving the mortgaged assets to the banks.

BNR came up with the idea of capping the loans that would qualify for giving in payment to EUR 150,000. The central bank also suggested that the debtor should have a debt ratio of more than 65% for the law to apply. BNR thus tried to make sure that only the vulnerable debtors would benefit from this new law and cut the possibility that real estate investors might also try to drop some bad investments on the banks.

However, the senators rejected these ideas, reports local Economicanet. Instead, they accepted replacing the word individual with consumer and defining the mortgage asset that will be given to banks as home, which means that the debtor has to live in the mortgaged property. Also, the debtors and the bank will be able to negotiate a settlement for 30 days, instead of 15, before applying the law.

Local banks have already reacted to this law and became more cautious in financing real estate acquisitions by increasing the down payments on mortgage loans.

editor@romania-insider.com