Credit Zone Manager Cristian Motca: First Home Programme Will Stimulate Banks To Offer Similar Products

The State-driven First Home Programme will stimulate banks to offer mortgage loans under similar conditions, which is the only beneficial effect of the governmental programme, according to Cristian Motca, Managing Director of the loan brokerage firm Credit Zone.

"One of the banks operating in Romania has already taken this step and I am sure that other banks will follow in the near future," Motca told BURSA. According to him, the real estate agencies that Credit Zone is working with are reluctant to offer customers any apartments that would be sold via the First Home Programme because applications for First Home loans take a very long time to be processed and there is a risk that the prospective buyer may lose the down payment made to the owner.

Real estate analyst Ion Radu Zilisteanu told BURSA that numerous prospective buyers had lost the down payment made to the owners because their application for a loan under the First Home Programme had taken too long to be processed. The time-consuming application process is managed by the banks, which, in Zilisteanu"s opinion, take an extensive period of time before offering a response, especially if the bank is located outside Bucharest.

"There are people who have been waiting for two months for a response from the bank. Many of them have already lost the down payment. Pre-sale contracts usually force the buyer to make a down payment and then pay the full price within 30 days. If the sale is not completed in 30 days, the down payment is lost. The owners usually have several prospective buyers in line and cannot wait for two or three months for the approval of a First Home loan," Zilisteanu added.

Daniel Dobre, Marketing Manager of the real estate agency Prezident, told BURSA that some of the prospective buyers had indeed lost their down payment, while others had managed to obtain an extension of the pre-sale contract. "We have a lucky customer who has already managed to obtain the approval form the National SME Loan Guarantee Fund (FNGCIMM) and the money from the bank under the First Home Programme," Dobre said.

Ion Zilisteanu believes that the FNGCIMM response time has started to pick up and that the banks are actually responsible for the delays in the approval process. "Of the 1,500 applications reviewed by FNGCIMM, 1,200 applications have been approved. Based on the 1,200 applications approved by FNGCIMM, the banks only signed 753 mortgage loan contracts, primarily because the banks" criteria are more restrictive. In addition to the Ordinance on the First Home Programme, banks also apply their own internal norms," Zilisteanu added. Referring to this issue, Cristian Motca added that no one knew how many of the approximately 700 applications approved by the FNGCIMM had actually materialized into mortgage loans.

The Credit Zone representative claims that many of the company"s customers have turned to "standard" mortgage loans as the First Home Programme has not proven to be functional. "This Programme will probably fall into oblivion after the elections... forgotten somewhere in a drawer," Motca added.

He further stressed that the banks had not yet announced the exhaustion of the credit limit set for the First Home Programme. "For transparency, banks should tell us how much money is left available for the First Home Programme. But they don"t. It"s either a huge transparency problem of the banks or the credit line has not been fully drawn.

Ruxandra Andrei, the Managing Director of Internet loan comparison portal Finzoom, explained the banks" reluctance to announce how much money was still left in the First Home credit limit by their desire to select the most eligible of the applicants. In this scenario, the contact information of the rejected applications would be retained by the bank, pending subsequent presentation of an offer for a "standard" mortgage loan, the Finzoom representative believes.

According to her, the best resolution time a First Home applicant can hope for is two months between submitting the application and actually obtaining the funds.