Primary mortgage market at embryo stage in Moldova

The primary mortgage market of the Republic of Moldova is at an embryonic stage, even if in the last two years the field registered an impressive growth. This fact impedes the development of the secondary market, is reported in the reform Concept of the legislative framework in the mortgage area, issued by the Ministry of Economy and Commerce. According to the concept, the fast development of the mortgage area occurred despite the lack of a coherent juridical framework. Some separate parts of the system and also registering estate, exercising mortgage rights and pledging estate property grounding on guaranty agreements were regulated, but this strategy led to the fragmentation of the legislative regulations on mortgage area, which includes the Law on security, Civil code etc. According to the MEC experts, the share owned by the mortgage construction area on the estate market is relatively small, and the absence of a Law on mortgage can affect the further development of the market. The contradiction between different existent laws creates confusion among the actors of the market, and the commercial creditors appeal to risky procedures to compensate the lack of law’s coherence. In this context, a Law on Mortgage would eliminate these doubts, consider the MEC specialists. According to the same sources, together with the elaboration of the Law, there will be taken strategic decisions on many aspects, especially if some activities to be regulated through law or to leave it to creditors, as part of business practices. The European Bank for Reconstruction and Development (EBRD) organized the last year, on Government’s request, an evaluation research of the mortgage market of Moldova and formulated several recommendations for the development of this market, presenting also the availability to offer technical assistance in drafting new laws in the mortgage area. By the end of 2006, EBRD could open a credit line for mortgage projects in Moldova The reform Concept of the legislative framework in the area of mortgage financing in Moldova can be found at www.mec.md/daytheme.aspx, and the proposals or suggestions can be sent to albin@moldova.md.