Tajikistan’s lower house (Majlisi Namoyandagon) has endorsed amendments proposed to the country’s law on mortgage. The amendments reportedly aim to enhance the legal foundation of mortgage of property.
The amendments, in particular, provide for transferring ownership of mortgaged property to a creditor without trial.
Simplification of the mortgage legislation will promote development of the mortgage lending in the country, according to the National Bank of Tajikistan (NBT).
Tajikistan adopted the law on mortgage in 2008, and lending agencies have provided a total of around 210 million somoni in mortgage loans since that time.
Currently, of 17 banks operating in Tajikistan, only two – Spitamen Bank and The First MicroFinaceBank of Tajikistan – provide mortgage loans. Besides, Microloan Deposit-taking Organization (MDO) Humo provides mortgage loans.
Recall, the Open Joint-Stock Company (OJSC) Amonatbonk (Tajikistan’s savings bank) is also expected to begin providing mortgage loans. Amonatbonk head Sirojiddin Ikromi remarked this at a news conference in Dushanbe on July 23. According to him, the bank’s own funds amount to 417 million somoni and they may use part of them to provide mortgage loans.
A mortgage loan or, simply, mortgage is used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose, while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society.
In many jurisdictions, it is normal for home purchases to be funded by a mortgage loan. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets for mortgages have developed. Mortgages can either be funded through the banking sector (that is, through short-term deposits) or through the capital markets through a process called "securitization", which converts pools of mortgages into fungible bonds that can be sold to investors in small denominations.
