Legal experts in the Chamber of Deputies have done their job on the giving in payment

More than three months after it was sent back to the Parliament, the Law of giving in payment passed the Juridical Commission of the Chamber of Deputies.

Meanwhile, the legislative text has undergone a series of amendments and each side has clung to some of their proposals until the last minute, while abandoning others.

Deputies have voted the law which stipulates the extinguishment of the debt through the assignment in favor of the bank of the property used as collateral in the borrowing agreement, with the following amendments: the cap on the amount borrowed at the time the loan was taken out has been set at 250,000 Euros, up from the initial value of 150,000 Euros; loans taken out through the First Home program have been removed from the law, which will no longer apply to them; the new regulations will also apply to debtors that have already been foreclosed on; all mortgage loans taken out for the building of homes, regardless of whether they have been guaranteed with a plot of land or not, will see the law apply to them as well.

Consumers and initiators of the law have been pleased with the version of the law that has been passed by the specialized commission.

Liberal deputy Daniel Cătălin Zamfir, the initiator of the law made the following statement at the end of the Parliament's session: "I still think that the 250,000 Euros cap raises issues of discrimination. But the wise course of action was to release the law. People who have borrowed less than 250,000 Euros represent the majority. If the Constitutional Court deems this restriction unconstitutional if the unconstitutionality exception is invoked, that this cap is unconstitutional, then that article will be removed from the law and the rest of those debtors will benefit from this law as well.

I do not think we have to notify the Romanian Constitutional Court at the present time. After all, we have reached a compromise with the PSD which resolves most issues".

In response to a question, lawyer Gheorghe Piperea, who drew up the text of the legislative draft, reiterated the fact that the loans outsourced abroad come under the effect of the Law of giving in payment, and said: "The entities which banks assign non-performing loans to are required to have a representative in Romania, for consumers to talk to. Usually, that proxy is the bank, and the consumer will notify the bank about the law of giving in payment".

Concerning the amendment according to which people who have already been foreclosed upon will see the law apply to them as well, NBR deputy governor Bogdan Olteanu warned that the introduction of a new category of beneficiaries in the legislative draft exceeds the scope of President Iohannis' request for reexamination.

He pointed out: "The president, in the request for reexamination, has asked for the narrowing, not the expansion of the categories that the law applies to. (...) This amendment has introduced a risk of unconstitutionality".

Bogdan Olteanu said that the NBR agrees to the provision that the Tax Administration should not be capable to pursue the debtor (ed. note: which is what would happen in the case of First Home loans, in the event of a debtor's foreclosure), even if that were to involve exceptions from the application of the Fiscal Code.

In the opinion of Adrian Vasilescu, a strategy consultant with the NBR, the elimination of the First Home Program from the law is a success, but even in this form, the legislative initiative does not resolve the imbalances between the banks and their customers.

Mr. Vasilescu told us: "The number of people who have borrowed money in the form of mortgages is outrageously low. (...) We have a shortage of 1 million homes. Under these circumstances, from my point of view, the law does not resolve the imbalances in the banking system and the ones between banks and consumers. It takes the intervention of the state and of the budget. The state, with its budget, must open the umbrella when it rains, meaning when banks close it".

Adrian Vasilescu also thinks that the Law of giving in payment has "failed the civil law test", and he thinks that the jurist deputies should clarify the legal issues before sending their approval to the plenum of the Parliament.

Deputies have also voted in favor of the law not applying to consumers convicted through a definitive ruling of offenses related to the loan which they are requesting the giving in payment for.

The last step until the law ends up on the table of president Klaus Iohannis is the vote in the plenum of the Chamber of Deputies - which is the decision making forum. Deputies have also said that the law will arrive in the plenum next Wednesday, because the report drawn up by the Legal Commission must be reviewed for at least five working days until the final vote.