First mortgage house credit to be allotted by late 2005

Elmar Rustamov, the chairman of the Managing Board of the National Bank of Azerbaijan (NBA) told the event that the mortgage and issue linked with it are one of three major projects, which are currently by the NBA. The next two are denomination and establishment of the National Payment System.

The law on Mortgage, adopted at the parliament on 15 April, enacted into law on 9 June 2005. “The State Mortgage Program is ready and it will be undersigned by the President after relevant unification. The program defines major milestones of the mortgage crediting," Rustamov underlined.

Rustamov refused to name the concrete parameters until the publication of the Program, but noted the inclusion of maximal limits of interest rates, amount of loan, terms. It also specifies standards which define 100sq m for a 4-member family (25sq m per person).Rustamov noted that in accordance with the obligations annual amount of repayment to the bank should not exceed 30% of annual legal incomes. Rustamov underlined that an access to mortgage crediting will be available only for the Azerbaijani citizens, while the access terms are equal for all regions of the country.

Rena Melikova, the head of the Law Department of the NBA, said that in case of refusal from repayment of the credit the people residing in the construction will have to leave it in accordance with the obligations undertaken. The dwelling area will be put for auction and sold. The difference between the sale price and debts to bank will be given to borrower.

In his turn Shahmar Movsumov, the senior advisor to the chairman of the Managing Board of the NBA, noted the necessity of implementation of the life insurance of a borrower to receive a credit. In case of death, the insurance company will cover the liabilities to the bank, while the heirs will receive the subjects of mortgage - apartment, or house, or plot. The municipal and state property cannot be a subject of mortgage. 30bn manats has been allocated for mortgage purposes in the 2005 corrected budget. The fund will be spent on the establishment of the Azerbaijani Mortgage Fund and the first mortgage credits will be issued by the end of the year.