The Mortgage Law will reanimate the real estate market. Info-Prim Neo interview with Valentin Margineanu, department head at the Municipal Mortgage Agency AMIC

[ - What makes the recently published Mortgage Law so necessary?] - It is very necessary because it introduces a series of innovations in the field. It regulates procedures in a more detailed manner, from the moment of entering into mortgage agreement to the satisfaction of mortgage. However, the Mortgage Law mustn't be regarded as an isolated piece of legislation, separated from the general body of laws. For our agency, the most important innovation is the possibility of placing the future property under mortgage. This will make things a lot easier for those who want to build an apartment or a house. And the law is very explicit in this regard. It offers extra safeguards both for the mortgage lender and for the mortgage borrower against a possible abuse on the part of the financial institution. [ - How does the Law benefit the banks that offer mortgage loans?] - For them the law provides for a very clear mechanism in what concerns the satisfaction of the rights related to a mortgage title, in case the borrower is not able to pay in full. Concerning future constructions, this is where innovations truly take place. Earlier, the lending banks were risking a lot when they agreed to finance future structures, because they had no tangible or liquid security. The new law allows the registration of to-be-built property. For example, in the case of a single-family detached house, the beneficiary comes with the design, obtains the construction permit and goes to the cadastral institution to register the future property, which he can late pledge to secure the payment of the mortgage loan. After that, the bank can finance the building of the house proportionally to the investments made . [- What are the benefits for the construction companies?] - We believe that the law can extend the circle of potential apartment buyers. The law enables a larger number of persons to take out mortgage loans and I think we'll have more clients and more work. [ - But what's in there for those who wish to solve their housing problems? As a rule, beneficiaries lament very high interest rates on the mortgage loans.] - The law has a separate chapter to protect the rights of the mortgagors. It explicitly states that the lenders must transparently offer all the information pertaining to the obligations originating from mortgage, including the interest, the total cost related to the mortgage loan, all the commissions to be paid, etc. It is a whole new provision that aims to deter practices, notably used in adverts, when the announced interest rate is low, but it conceals high commissions. Another important aspect: the law introduces insurers. It obliges the borrower to insure the object of the mortgage. In Moldova, the general attitude towards insuring is quite cautious. It's true, this involves extra costs, but I don't think they will be that great. Given the rising number of mortgage agreements, the insurance companies might reconsider their pricing policies. In addition, insuring the object of the mortgage is a supplementary guarantee for the borrower if he falls on hard times. We shouldn't be scared, in Europe 98 percent of the real property is insured. Here, I don't know if we reach one or two percent. [ - Should we expect a boom on the realty market after the adoption of this law?] - I will refrain from predicting a boom, but an animation will surely occur. Especially in what concerns the new apartments. On the secondary market, I don't think the law will have a significant impact. Taking into account the new mechanism that allows placing some future property under mortgage, people will use this opportunity not just to improve their living conditions, but also to upgrade their comfort.