THE LAW OF GIVING IN PAYMENT:  Zamfir - 2, NBR - 0

Banks seem to be playing a losing hand in the battle on the Law of giving in payment.

After the Budget commission of the Senate rejected the proposals of the NBR on Tuesday, yesterday, among blunt lines and applause, senators in the Legal and the Economic commissions have rejected the amendments proposed by the Central Bank as well.

Furthermore, there are still two stages that the law needs to go through before its final approval - the vote in the plenum of the Senate and the one in the Legal Commission of the Chamber of Deputies, which is a decision-making forum.

Yesterday, the draft of the law of giving in payment has been voted by the senators of the two commissions in the form proposed by liberal deputy Daniel Cătălin Zamfir.

If this form receives the final vote, then it will also be applied to ongoing contracts, including the ones concluded through the First Home program, also applying to those in foreclosure, without a limitation for the amount of the loans.

NBR deputy governor Bogdan Olteanu said that the NBR will continue to support the proposals it has sent to the Parliament last Friday.

He said, quoted by Mediafax: "Today's (ed. note: Wednesday's decision) of the commissions was against our arguments, we will continue to support our arguments in the plenum of the Senate and, further, in the Chamber of Deputies. We will also try to convince the plenum of the Senate and the Chamber of Deputies about a few elements that go beyond the realm of unconstitutionality and into literature. For example, it has been decided today in the two commissions that, if two people have joint ownership of an asset, one of them can assign it without the agreement of the other. It has also been decided that when a person has put up as collateral an asset towards two creditors it can first hand over the asset in question to a creditor, and at the same time to the other creditor. We are also going to explain in the plenum of the Senate that, deciding to cancel the guarantees already put up by the state in the case of the First Home program for the over 150,000 debtors, meaning that the state is going back on its own obligations, so it's a form of default. Obviously, this thing will need to be understood and removed from the legislation".

NBR deputy governor Liviu Voinea showed that the government program will disappear, if the version of the law that has been voted so far gets passed.

Deputy Zamfir, the initiator of the law, brought up some interesting clarifications: "What hasn't been said very clearly up until now, especially by the National Bank, is what happens to a person that is unable to make their payments. The moment that happens, the government does indeed pay the debt in question to the bank, but then, the Romanian government, through the National Tax Administration (ANAF), turns against the citizen to recoup its debt, and the penalties of the ANAF are absolutely crushing.

And thus, I have wanted to avoid having two types of consumers in the future - the ones that have borrowed money under normal circumstances, who will be liable only within the limits of the mortgaged asset, and the one who have borrowed money as part of the First Home program, who, aside from the fact that they are liable for the mortgaged asset, they will also be subjected to foreclosure in the future for recouping the loss. The First Home program will certainly continue. If the banks don't want it, we can make a government agency anyway. If the state decides to subsidize homes for young people, it can do so without any problem".

Referring to those who are already in foreclosure, Cătălin Zamfir said: "Every amendment I have proposed concerning this law has been adopted I want to confirm the fact that this law will also apply to debtors who have already been foreclosed upon. They will have the ability to go to court to show that their assets have been seized in order to get the attachment of their revenues lifted. I think it is absolutely necessary for people who have already been foreclosed not to be forced to pay until the end of their lives".

Liviu Voinea has contributed some clarifications concerning the number of debtors, stating, as quoted by Hotnews: "As a regulator of the banking market, as well as a provider of quality information, the NBR thinks that it is useful to present the situation of mortgage loans, to facilitate the debate. It has been purported that there are about 800,000 families that are unable to make their loan repayments. That is false. The exact number is 474,000 persons that have taken out loans. Out of those, 174,000 have taken out mortgage loans, 155,000 have taken other real estate investment loans and 133,000 have taken out mortgage-backed consumer loans. We have 6,891 debtors whose loans have been assigned between 2012 and 2015, distinctly from the figures mentioned above. But not all of those loans are non-performing. 316,000 have foreign currency denominated loans. CHF borrowers represent 10% of foreign currency borrowers. The data was valid at the end of 2015.

People with loans of less than 150,000 Euros have a non-performance ratio of 4%, and those with loans exceeding that amount have a non-performance rate of 27%.

The non-performance rate of real estate loans is 2.6%. The number of debtors with loans that are 30 to 90 days overdue is 13,443, whereas the number of borrowers with loans that are more than 90 days overdue is 17,500. Debtors that have overdue mortgage loans are 3,099. There are 159,106 debtors that have taken out loans under the First Home program. Their non-performance ratio is 0.04%. This is an argument not to have them included in this law.

Most real-estate debtors - 96% - have put up buildings as collateral, whereas 4% used plots of land as collateral. The non-performance ratio among the latter is 30%".

Whereas some MPs said that they do not believe the figures presented by Liviu Voinea, deputy Zamfir has reacted: "This law is not a social law, but one of protection against abuse from banks. Banks have lent out money to borrowers who didn't qualify. And you, the NBR, are saying that you have been a fair referee. No, you haven't! Let us legislate what is good and what is bad for the people. When you wanted to be nominated on the Board of Directors, you would come in all humble to get our votes (ed. note: to Bogdan Preda, executive director of public relations of the Council of Romanian Banking Professional Associations)! You probably won't be visiting us for years after this. You have granted hazardous loans, now deal with the consequences!"

Enache Jiru, state secretary in the Ministry of Finance, warned that the retroactivity of the law could lead to international lawsuits being brought against Romania, which is a very high risk.

However, that statement didn't leave a mark.

The law of giving in payment, approved by the Parliament with just one vote against it and one abstention, had been previously sent back to the Parliament by president Klaus Iohannis at the end of last year.