OREANDA-NEWS. February 18, 2011. Raiffeisenbank offers its customers a new mortgage payment instrument: paid irrevocable letter of credit. The mortgager’s money is deposited on a special bank account to be transferred to the seller only when all terms of the deal are met. The property seller receives the money when the title has passed to the mortgager. Once the LoC is opened, the money cannot be accessed by the mortgager, reported the press-centre of Raiffeisenbank.

Letter of credit can be opened for any term up to 180 days, which can be extended if mutually decided so by the mortgager and the seller. If the LoC has expired and not renewed, while the property title has not passed to the mortgager, the money is returned to the mortgager’s account. The fee for opening of LoC ranges from 1,500 roubles up to 15,000 roubles, depending of the credit amount.

"The use of a paid letter of credit to facilitate mortgage settlements offers our customers a secure means of guaranteed payment when purchasing a flat or a house," says Andrey Stepanenko, member of the board of Raiffeisenbank, head of retail private individuals directorate.

The standard safe box option for similar settlements remains.