Mincom speaks out on the ‘Mortgage Bill’

The Ministry of Trade and Commerce (Minicom) has come out to give a position on the ongoing amendments of the Mortgage Bill which is currently before parliament, specifically saying contentious issues raised by prime stakeholders of the mortgage industry have been addressed.

The Ministry of Trade and Commerce (Minicom) has come out to give a position on the ongoing amendments of the Mortgage Bill which is currently before parliament, specifically saying contentious issues raised by prime stakeholders of the mortgage industry have been addressed.

“The law is being amended at the level of parliament and new amended law will be enacted soon. We are confident that the bankers will be happy with the new amended law and also borrowers will be happy with that law,” Antoine Ruvebana, the Permanent Secretary at Minicom told Business Times on Wednesday.

The Permanent Secretary was responding to an article published by the paper’s weekly Business Magazine titled “Banks call for changes in the Mortgage Bill” published on 21 December in which the mortgage lenders (bankers) were demanding for additional amendments.

In the article, bankers through the National Banker’s Association indicated that despite earlier amendments, the mortgage bill is still wanting.

Specifically, the bankers demanded for the amendment of clause 2 of article 14 which indicates that in case of default, the mortgagor can lease the mortgage in agreement with the mortgagor (the creditor who received the mortgage).

The industry representatives are also uncomfortable with clause 3 and 4 that gives “excessive” protection to the mortgagor. The clauses say that in case of default, the bank should possess or sell the mortgage in agreement with the creditor.

“I regret that if this clause stays there will be no borrowers to protect. This is really important and the banks are very strong in their view that it has to be removed,” asserted Steve Caley, the chairman of the Bankers Association in the article.

However Ruvebana says, while the mortgage bill is still under review, the interests of the bankers have been considered.

“What I can tell you - may be they are talking about the old law which has some imperfection. Article 14 clause 2, 3 4 that there are mentioning-have been amended,” he said, pointing out that amendments were finalized in mid- November.

The Permanent Secretary explained that in contrast to the old bill, the new bill gives more rights to the bank in the creditor defaults.

“We have removed the word “in agreement” with the mortgagee or the defaulter. The draft has gone through the commission -now it is about to go the plenary. We are confident that it will be enacted soon.”

When contacted for a comment about new developments revealed by the Permanent Secretary, the chairman of the Banker’s Association said he would have to first see the bill in its final form to comment.

“If I could see the final draft of the bill and be re-assured that the banks’ views have been taken into account and that consent is NOT needed, we could then collectively be comfortable that it would be safe to resume mortgage lending which would be good for the banks and the borrowing public.”Caley told Business Times on Wednesday.

Only four out of eight commercial banks embrace mortgage financing alongside Rwanda Housing Bank.

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