OREANDA-NEWS. October 03, 2008. Moldova has adopted a new mortgage law, which was drafted with assistance of the EBRD. The law was accompanied by an amendments law bringing a number of amendments to related laws, reported the press-centre of EBRD.

Developing a new mortgage law had been a priority for the Government of Moldova for several years. The Ministry of Economy and Commerce (MEC) and the EBRD set up a committee of key stakeholders of the private and public sectors was formed. Mortgage specialists from several countries shared their experience of international best practice, including the systems adopted in neighboring countries such as Romania, Ukraine, Russia and Serbia.

The main goal of the reform was to consolidate under one single law all provisions concerning mortgage, which often resulted in contradictory, unclear and incomplete provisions. The reform also aimed to remove the numerous impediments for the development of the primary mortgage market and to establish the basic framework for the refinancing of mortgage creditors, including issuing mortgage securities (secondary mortgage market) as and when the international markets will stabilize and a critical mass of mortgages will be accumulated in the Moldovan banking sector.

Mortgage lending in Moldova has increased in the last few years, but there remains great scope for expansion - and the law will contribute to this through the following features:

The law provides that mortgage lending can be undertaken by any institution, as long as it is property regulated;

The law significantly expends the range of obligations that can be secured by a mortgage (including future loans);

The law establishes a new regime for mortgage over future and unfinished buildings that should contribute to expanding the financing possibilities for property developers, as well as individual property buyers;

The law removes the technical impediment preventing the simultaneous/subsequent registration in the cadastre of title transfer and mortgage right over the same property, which will facilitate the financing of property purchase;

The mortgage enforcement procedure is streamlined to offer more security to both mortgagor and mortgagee. The parties also may agree on voluntary enforcement of mortgage (as opposed to court-led process), saving time and money to both parties;

The law now requires the property to be mortgaged to be independently evaluated and fully insured for the length of the mortgage, in accordance with the international practice in this industry;

The law contains a set of consumer protections provisions, based on EU Voluntary Code of Conduct for Mortgage Lending, applicable when the borrower is a consumer. In addition the confidentiality of the borrowers personal data is protected by the new law;

The law will allow the Moldovan provider of mortgages to apply the EBRD’s List of the Minimum Standards and Best Practices for Mortgage Lending.

On 24 October 2008 a one-day conference will take place under the auspices of the EBRD and the MEC when the market players will be presented the details of the new provisions and given the opportunity to raise any questions that they may have.