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It took a year and five months since the Swiss Franc blew up for us to adopt an extreme solution for people who borrowed in the currency that looked so tempting eight years ago.
Friday, 13th of May, 2016, will remain in the history of the banking system and in the memory of the debtors as the day that allowed the giving in payment of the real estate guarantees, as the borrowers get discharged of their whole debt.
But how are they set free?
By giving up the home that they have enthusiastically acquired, while trustingly taking on banks as long time partners.
By rejoicing that they are getting rid of the home in which they have spent so many sleepless nights pinching pennies to make their monthly payments.
Over 100 installments paid that they are now happily giving up on, to start over.
How? It doesn't matter ... What matters is for them to be released from the burden of paying amounts that were several times bigger than the ones they borrowed, to leave behind the long and unsuccessful fight that they had over the last few years with the banks, to forget about the currency that brought them joy and distress.
After they failed in their repeated attempts to negotiate with the banks, after they have hoped the Parliament would pass a law that would stipulate the splitting of the currency risk between them and the lenders, after countless street protests, after sending thousands of messages and letters to all the competent national and international institutions, CHF borrowers are celebrating a bittersweet victory today - the coming into force of the law that allows them to give their homes to the banks without them hounding them until their death and beyond.
What tops it all off is that this extreme measure does not sit well with banks either.
The law of giving in payment, probably the most controversial and most debated legislative initiative in Romania, can be applied starting today, but the disagreements over the text and over its potential effects have not ceased.
Both the commercial banks, the officials of the National Bank of Romania, the Government and the international lenders have spoken out against the law. Their opinions were at odds with those of the initiators, the members of the parliament and of the debtors.
The biggest uncertainty now hovers over the number of borrowers that are going to give their homes back to banks.
Opinions are divided, some of those who are interested are certain that people will not want to give back their home, while others, to the contrary, will swarm banks to get rid of their debt.
The initiators of the law claim that, regardless of whether they are going to give the property back to the bank or not, when debtors send a notice to the bank means that they will be required to negotiate with their borrowers, and the installments will be frozen until the situation is clarified.
Many bankers have said that the banking institutions will dispute the consumers' actions and will invoke the unconstitutionality exception. This exception however, will also be raised by customers, who will seek the elimination of the 250,000 Euros in the text of the law.
Liberal deputy Daniel Cătălin Zamfir, who promoted the legislative draft, told us: "The exception of unconstitutionality can be raised by a debtor who has a loan of more than 250,000 Euros and who goes to the bank to give in payment, and the latter will obviously refuse, because they won't meet the legal requirements. The debtor will sue the bank and will invoke the unconstitutionality exception of the imposed amount cap.
The lawsuit will last a few months, and between that time and during the time when the Constitutional Court is judging, the debtor will not pay anything to the bank. The law of giving in payment stipulates that, starting from the time they submitted the notification, the debtor wouldn't be making any installments payments to the bank until the situation is resolved. The law protects the consumer.
Should the Court decide that the ceiling is unconstitutional, the Parliament will be forced to remove that cap from the law".
Another heavily debated issue these days is that of notary fees, as the Association of Romanian Users of Financial Services (AURSF) is demanding their reduction by 90%.
Also, according to the Fiscal Code, consumers would have to pay a 3% tax.
Daniel Zamfir says that the Ministry of Public Finance should decide that the giving in payment is not a sale, but a debt discharge. He said: "People will send notifications, and then, if they have to pay 3%, they will no longer give the home in payment, and the banks will be forced to participate in negotiations, because they will have already received those notifications and the debtors aren't paying anything. If the bank doesn't come in 30 days to take in payment the property in question or to negotiate, then customer is going to bring a lawsuit against it.
From now on, Damocles' sword will no longer be hanging above the borrowers' head, but the banks', and all the dallying is detrimental to them. It would be in their interest to come up with solutions".
Lawyer Gheorghe Piperea, who drafted the law further says: "If banks aren't going to negotiate or if they are going to dispute the giving in payment, then people will stay for years with the notification submitted and without paying the monthly installments. If the bank doesn't accept the giving in payment, then the debtor can go to court, but it isn't mandatory".
• Customers: "Banca Transilvania will not negotiate, while Piraeus Bank bank is willing to do so"
Unofficially, rumors about how individual banks are going to behave have begun making the rounds.
According to debtors, if Piraeus Bank România is decided to negotiate with the debtors, Banca Transilvania has decided it will accept the properties that have been given in payment, but will not negotiate with customers.
The representatives of the Group of CHF Borrowers yesterday posted on their Facebook page: "Yesterday, Piraeus has sent a memorandum (with instructions) to every branch, with the procedure for the application of the Law of giving in Payment. (...) They are going to negotiate better, more humane payment terms with those who want to keep their homes. (...) This information is certain, it is not based on hearsay. (...) Headquarters to branches - «We hereby inform you that we want to welcome the customers that are facing financial difficulties, with repayment solutions based solutions, on a case by case basis, and with the option of renegotiating the contractual terms, to prevent them from being forced to give up the homes acquired through loans granted by Piraeus Bank»".
The information published on May 10th, on the Facebook page of a group of Banca Transilvania borrowers, about the decisions of the bank are making diverging claims.
Bank customers wrote: "BT has issued an internal memorandum which states that every customer that resorts to giving in payment and meets the requirements of the law will benefit from its effects, but no negotiation for better loan repayment terms will take place, because the bank views that as discriminatory for the other BT customers. However, it is considered that any borrower acting in good-faith, before resorting to the giving in payment, will make all the due diligences to negotiate with the bank, with the giving in payment would be the last resort solution. (...) We stand by our idea that it was a rushed, incomplete and vague initiative, but of course, as a bank, we are going to comply. We could say that we will have a new category of customers - who have believed in a personal investments and for various reasons can no longer continue. When we putting ourselves in their shoes, we can see that it is not easy at all. We will comply with the law strictly within its sphere of interpretation and we do not intend to have additional negotiations concerning the loan contracts with the customers that send us notifications - precisely because such a behavior would be discriminatory and wouldn't be ethical for the thousands of customers that have taken out real estate loans from BT".
For the moment, a considerable number of banks have considerably increased the advances to mortgage loans.
The 11 banks that have taken that step are Raiffeisen Bank, Alpha Bank, BRD Groupe Societe Generale, CEC Bank, BCR, ING Bank, Bancpost, Banca Românească, Intesa San Paolo, Garanti Bank, UniCredit Bank.
Banca Transilvania will change its own policy when it comes to real estate loans/mortgages, starting next week, according to sources quoted by Hotnews.
The sources claim that they are working on various scenarios, the most likely being that young people looking to borrow money to buy a home will have to pay smaller downpayment than those looking to borrow money via companies using real estate properties as collateral.
BT officials declined to comment on this issue.
OTP Bank officials yesterday told us that they do not intend to raise the downpayments in the coming period.
• Piperea: "The first people to notify the banks will be those who have been foreclosed"
Debtors' opinions are also mixed. While some that they will enthusiastically go first thing in the morning to notify the bank that they will be giving their home in payment, others are saying that they would rather go to court and ask for the conversion at a historic exchange rate.
The first to request the giving in payment are those who have already been foreclosed on and whose homes have already been taken away, says Gheorghe Piperea.
Those who want to resort to the new law must notify the bank about their intention of giving in payment, through a lawyer, a foreunui executor or a notary and to wait for 30 days the acceptance or the dispute of the bank. If the dispute is admitted, the parties will be placed in the initial situation.
If the bank doesn't comply with the provisions of the law, then the debtor can go to court and ask both the extinguishment of the mortgage loan, as well as the transfer of the right of ownership.
Sent back to the Parliament by president Klaus Iohannis, the law has been approved in the plenum of the Chamber of Deputies with one vote against it and one abstention.
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