Property rent from the banking network?
On the one hand, the historical track record of “paying installments” by households that have become home owners with mortgages shows that there is no acute or widespread problem called “proprietary houses”. On the other hand, the drafters of the same resolution admit that “the sale of real estate of banks, regardless of the daily price, will cause losses to depositors.” Despite this fact, the triple consequences of this license have been investigated for the banking network.
Property rent from the banking network?
The new approval letter of the Money and Credit Council, which was published on the central bank’s information site last Wednesday under the title “possibility of handing over owned residential properties to their owners”, seems worthy of consideration in at least two ways; Why the possibility of restitution only for “some people” and why allow this while “acknowledging the losses of the banks”?
This resolution has allowed the banks paying mortgage loans to “return to their owners” the apartments that have been acquired by the bank in recent years due to “non-payment of mortgage installments by the owners of these units.” The only main condition for the return of the acquired apartments to the first owner is “settlement of the interest and principal of the facility plus the amount of the annual late fine”. So far, it seems that the drafters of this resolution “support the weak classes who have become homeowners with mortgages, but in this period of inflation and the sharp increase in the cost of living, they have not been able to pay the loan installments and as a result, their houses have been taken over.” is”, they have applied for the license to “return the owned house”. But considering the two terms in this resolution on the one hand and the reality in banks in the field of mortgage loans on the other hand, it seems that the audience of this resolution is not necessarily the weak and in real need of support.
In the text of the resolution of the Money and Credit Council, which was announced under the title “The possibility of handing over the residential property acquired by the banks to their owners in the form of a reduction”, “the duration of the implementation of this resolution is 6 months” and also at the end of this text It is also emphasized on “solely with the approach of supporting some people in terms of special conditions and terms”.
The first uncertainty about this decision is its “temporary and several-month implementation” according to the two mentioned phrases. That, for a short period, some bank debtors are allowed to access the property that the bank has acquired according to the housing facility contract and after repeated warnings about “delayed installments and the need to pay late installments”. And to own it again, does it mean “general support for all home loan recipients unable to repay the installment” or “case specific support”? Considering that, “the process of acquiring debtor’s houses due to mortgage loans” if it is significant, it will not stop and will continue forever. However, the second ambiguity provides an answer to the first ambiguity to some extent.
Surveys on “the dimensions of residential properties acquired by banks due to non-payment of mortgage loan installments” show that the ratio of “acquired houses to the total housing purchase facilities paid in a bank that provides the most housing facilities” is equivalent to less than 5 apartments against It is 100,000 facilities per year, which seems very insignificant. On the other hand, the total residential and non-residential properties acquired in this area by a bank that pays about half of the facilities in the housing sector per year and almost 70% of the living facilities in this sector are provided by this bank, it is said that less than 50 properties Among them, maybe the share of the residential unit in the total of these properties is much less.
This situation, which will probably be better analyzed with the publication of an official report by the Central Bank on “the latest situation of the number of residential units acquired by each bank due to non-payment of loan installments”, specifies, “basically, households that They have become home owners with a home loan in all the past years, and they have done their best to pay the monthly loan installments on time.” From an economic point of view, “non-payment of facility installments is a costly red line” of interest to households that have acquired housing with a bank loan. A clear example of that is “the process of paying installments of Mehr mortgage loans” that the weakest classes, some of whom own these houses, have always been committed to “paying installments of Mehr mortgage loans on time.”
In the mid-1990s, a report by the then CEO of Maskan Bank announced that, “the lowest outstanding facility is related to housing loans.” At that time, economic experts analyzed that “housing is the most important asset of households, and considering the ratio of installments of house purchase facilities to other living expenses, especially rent, paying the installments of this loan is the priority for households to spend.” He says, basically, “the issue of acquiring residential units due to non-payment of loan installments” has not created a problem so far. In this way, it is necessary to clarify whether “public support” is on the agenda or “support for people who have not returned the bank loan on time due to reasons other than real economic inability”, the most important example of which is “announcement of the report Statistics of the condition of acquired residential properties are based on the location of these units, the price at the time of purchase of these units and the non-payment of facility installments.
Do banks make losses?
Investigations about the payment procedure of the housing purchase facility and the agreement between the borrower and the lender indicate: the recipient of the housing purchase facility, whose house is purchased by him, at the time of payment of the facility from the bank, is placed in the bank’s mortgage, is obliged and committed to Monthly and regular payment of facility installments.
This facility is financed from the bank’s resources and from the deposits of the lending bank’s depositors, and any kind of “failure to pay the installments on time” means “a malfunction in the mechanism between the bank and the depositors”. On the other hand, when the debtor’s house is owned by the bank, the lending bank, after paying the difference between the interest and the principal of the facility and the current value of the property, includes that property in the financial statements under the title of the bank’s property. In this case, if the sale of the property is not done at the price of the day and is handed over at the price at the time of possession, in practice, the bank must recognize a loss, which will be the loss of both the bank and the depositor. The point to be considered in this resolution is the recognition in the text of the resolution of the same loss in case of transfer at the price of possession. In the text of the approval of the Money and Credit Council, it is stated that: “It should be said that the property owned by the credit institutions are considered as assets of the credit institutions and generally, they have been re-evaluated according to the legal requirements and rulings, in other words, at the current price in the financial statements. Credit institutions are registered.
Therefore, in this situation and in case of handing over the acquired property to the previous owner, not at the current value, but in exchange for paying all the debt of the previous owner, including the sum of the principal balance and interest of the unpaid facility, in exchange for which the property was acquired by the credit institution and the late payment Payment of the debt owed, the credit institution suffered a loss and must recognize the loss in its financial statements. Imposing losses on the credit institution in addition to negatively affecting the interests of depositors (due to the interest paid on their deposits), the government (due to taxes) and shareholders (due to the profit from the financial performance of the credit institution in the financial period), in the sense of reducing ownership rights That and, as a result, the weakening of the credit institution’s ability to provide facilities, which in the current conditions and requirements of the country, as well as the fact that the financing system is bank-oriented in our country, the unrestricted provision of such a measure is not reasonable. In this way, the drafters of this resolution are aware of the “consequences of this resolution” and have announced it officially.
Now, if the issue of the ownership of debtors’ apartments due to housing loans is a widespread problem for the people who really need support, maybe from this point of view, this resolution seems acceptable. But the situation that is currently clear in the absence of statistics is that “the majority of households that have become homeowners with a home loan have always paid the installments on time.” Economic experts describe the consequences of “allowing the return of owned houses to bank debtors” in three groups. The first losers are those people who “if the owners with mortgages paid their monthly installments to the bank on time”, with the resources returned to the banking network, they too could access the facilities and become home owners. In simple terms, as much as the payment resources of the banking network return to the network in a timely manner in the form of regular installments, “the ability to lend at the moment is strengthened or not lost.”
Since during these years, “the issue of securing credit in banks to pay for long-term housing purchase facilities has always been a concern and problem”, not paying the installments on time aggravates this problem. The second loss is directed at the depositors, which is caused by the sale of the bank’s property at the price of a few years ago. Real estate inflation has been an average of 35% annually in Tehran for at least the last 10 years, and of course, this figure has been reported as 61% in the last 4 years. The third loss is due to the “signal that this resolution sends to future borrowers”. It seems that bank privilege to debtors causes indebtedness. In a situation where facilities at a rate lower than general inflation provide the conditions for unconventional exploitation of facilities in other areas, such concessions will also intensify the diversion of resources and cause, even if the share of owning a house is very small due to non-payment of the facility installment, It is likely to increase.
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