The President of
\nRomania Klaus Johannis has promulgated the debt discharge law, which, in a
\nfirst stage, he had sent back to Parliament for review. Under the new law,
\npeople with mortgage loans under 250,000 euros who can prove they can no longer
\npay their due instalments may request banks to take over their home and erase
\nthe debt. Tens of thousands of Romanians have outstanding payments for their
\nhouse loans and many of them are already subject to foreclosure. Adding to
\nthese are people who took out personal loans and pledged their homes as
\ncollateral. <\/p>\n
<\/p>\n
\n
<\/p>\n
The latest data
\nmade public by the National Bank of Romania indicate that 300,000 families have
\ntaken mortgage loans in Romania. Only half of them borrowed the money directly
\nin order to buy a home, whereas the others used their homes as security for
\ntheir personal loans. Regardless of the case, the debt discharge law enables
\nthem to give up the loan in exchange for the house, as long as they can prove
\nthey can no longer afford to pay the loan instalments. However, this is not the
\ncase for the people who have bought homes under the First Home programme,
\nbecause the provision in this respect was scrapped by Parliament.<\/p>\n
<\/p>\n
\n
<\/p>\n
The retroactive
\napplication of the law has given rise to many ambiguities. There are people
\nwhose homes have already been repossessed, but who still owe banks the balance
\nto the credit amount. They too may request a settlement in court. A growing
\nnumber of banks have announced, in response to a law they have opposed, that
\nthey will increase the down payment for granting mortgage loans, and one bank
\nhas already introduced a separate offer, with smaller down payments for credits
\nover 250,000 euros, the ceiling up to which the debt discharge law is
\napplicable. <\/p>\n
<\/p>\n
\n
<\/p>\n
Although lending
\nis recovering in Romania, against the backdrop of low interest rates, the
\nEuropean Commission warns that uncertainty might backfire, with the most
\nsignificant risks identified in relation to the uncertainties triggered by the
\ndebt discharge law. The Commission says the law may have a substantial negative
\nimpact on investor confidence, as well as on long-term lending prospects. <\/p>\n
<\/p>\n
\n
<\/p>\n
The
\ncontroversial law has already been published in the Official Journal of
\nRomania, which means that as of May 13 debtors may show up in bank offices to
\nhand out their home keys, in exchange for having their debt settled.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
The widely debated bill on debt discharge has been signed into law by President Klaus Iohannis and will take effect on May 13.<\/p>\n","protected":false},"author":107,"featured_media":68162,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[37738],"tags":[30176],"coauthors":[],"class_list":["post-68408","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-today-in-the-news","tag-debt-discharge-law"],"acf":[],"yoast_head":"\n