Bulgarian MPs adopt mortgage default protection bill
Bulgaria’s Parliament passed at second reading on June 19 a bill amending the Civil Procedure Code, meant to provide stronger protection for bank customers defaulting on their mortgage loans.
The key provision of the bill is to require that any foreclosed properties going on auction cannot be sold for less than their property tax evaluation – the value calculated by revenue agencies that is used as the basis for imposing local taxes.
The amendment is meant to end the practice in which repossession agents would sell foreclosed properties at low prices, enough to cover their own fees and only part of the debt owed to the bank, which could leave mortgage defaulters still owing money to banks.
Additionally, the bill mandates the central bank and justice ministry to set up a mechanism in which defaulters would have to pay a one-off fee if their bank accounts are frozen, regardless of the number of accounts, as opposed to paying such a fee for each of their frozen accounts. An amendment banning repossession agents from charging fees higher than the debt owed, however, was rejected by MPs.
According to banking statistics quoted by the opposition during the debate on June 19, of 150 000 mortgage loans in Bulgarian in 2013, about 35 000 were non-performing, including 17 000 cases in which mortgage recipients stopped paying their dues altogether.
(Photo: Clive Leviev-Sawyer)
