LAW NO. 190 DIN 1999 (IPOTECAR CREDIT)
Mortgage loan and its guarantee
Art. 1. - Under the present law, the mortgage credit for real estate investments designates the type of credits granted by authorized financial institutions intended to finance the construction, purchase, rehabilitation, consolidation or extension of residential, industrial or commercial real estate.
Art. 2. - The mortgage credit for real estate investments is granted for a period of minimum 5 years for legal persons and for a minimum of 10 years for individuals.
Art. 3. - (1) The mortgage loan for real estate investments shall be guaranteed by mortgages or privileges, as defined in art. 1.737 of the Civil Code, on land or building - for which the credit is granted.
(2) The mortgage thus established for the loan guarantee may cover the land and the constructions built upon it after its establishment, within the limit of the value determined by the contract and the extent of the use of the credit.
(3) The provisions of art. 1.775 of the Civil Code does not apply to mortgages created to guarantee loans granted under the present law.
(4) Mortgages or privileges set up to guarantee mortgage loans shall last until the full repayment of the credit for which they have been guaranteed, and the provisions of Art. 1,786 of the Civil Code.
(5) If the parties agree, the mortgage may be transferred to another building with a value at least equal to that of the previously mortgaged property.
(6) After the mortgage has been registered on the new building, the guarantees previously established on it shall cease to be effective.
Art. 4. - The provisions of Art. 1.722 of the Civil Code applies only if the advertising formalities provided by the law have been fulfilled before the mortgage is registered.
Art. 5. - Until the full repayment of the loan, the mortgaged properties may be alienated only with the prior consent of the mortgagee. Contracts concluded in breach of this provision are punished by absolute nullity.
Institutions granting mortgages and individuals
who can benefit from mortgages
Art. 6. - Banks, the National Housing Agency, the Savings House and Consignments House and other financial institutions authorized by law, including mortgage funds, may grant mortgages.
Art. 7. - The natural persons who have Romanian citizenship and domicile in Romania and Romanian legal persons whose object of activity is the building, rehabilitation, consolidation or extension of the buildings with a locational, industrial or commercial purpose, may be granted under the present law, as well as Romanian legal persons wishing to build housing or service homes for their employees.
The mortgage loan contract and the insurance contracts
Mortgage Credit Contract - Mandatory Clauses
to protect borrowers
Art. 8. - At least 10 days before the signing of the mortgage loan agreement, the lender shall provide the borrower with a written offer which shall include all the terms of the contract and the term of validity of the contract.
Art. 9. - The mortgage credit agreement may be amended only by written agreement of the parties, in compliance with the provisions of this law.
Art. 10. - (1) The amount of the loan granted shall be made available to the beneficiary of the mortgage loan, either in full or in full, the payment being made directly to the seller in the case of buying a building or to the constructor in the other cases.
(2) If the works for which the mortgage loan has been granted will be carried out on its own account by the beneficiaries, the money will be transferred to them according to a financing plan established by the contract.
Art. 11. - (1) It is forbidden to condition the granting of a mortgage loan by the obligation of the beneficiary of the loan to buy or to subscribe securities of the lender, no matter what the form.
(2) The prohibition provided in paragraph (1) shall not apply to the acquisition of mortgage-backed units.
Art. 12 - Early settlement clauses must be provided in the mortgage credit agreement by a distinct clause.
Art. 13. - (1) The borrowers have the right to repay in advance the credit received, under the conditions established by the parties under the mortgage loan agreement.
(2) In case of bankruptcy or voluntary liquidation of the lender, the borrowers have the right to repay the mortgage received in advance.
Art. 14. - If the mortgage credit agreement has established that the interest rate is variable, the following rules shall apply:
a) the interest rate variation must be related to the fluctuations of a reference index; it must be chosen from a series of reference indices whose list and mode of calculation will be established by a Government decision after their approval by the National Bank of Romania;
b) the contract may stipulate that the interest rate variation is limited, in a rising and descending order, at a certain level compared to the initial interest rate. The contract may also stipulate that the interest rate does not vary except when the change in ascending or descending order records a minimal difference from the initial interest rate;
c) the interest rate change must be communicated to the borrower at the latest on the date of application of the new rate.
Art. 15. - The borrower shall be charged only with the expenses related to the preparation of the file and the constitution of the mortgage.
Compulsory insurance contracts
Art. 16. - (1) The Borrower shall conclude an insurance contract for the mortgaged property, valid for the entire duration of the mortgage loan.
(2) In the insurance contract provided in par. (1) the lender will be a beneficiary of the insurance policy. If the indemnities granted exceed the amount of the mortgage loan remaining to be repaid and the other amounts owed to the lender, the difference is due to the beneficiary of the credit or his heirs.
(3) The insurance premiums will be paid by the borrower, once repayment of the mortgage loan rates received.
Art. 17. - If the borrower is a legal person, he will have to conclude an insurance contract for the risk of not finalizing the construction for which the mortgage loan was granted, the beneficiary being the lender.
Art. 18. - The insurance contracts provided for in art. 16 and 17 will end with an insurance company, and the lender will not have the right to impose a certain insurer on the borrower.
Executing the claims of institutions granting mortgages
Art. 19. - In case of late payment, the lender will send a notice to the beneficiary to the Loan by registered letter, preventing it from the consequences of the mortgage credit agreement.
Art. 20. - In case, within 30 days from the receipt of the notification provided for in art. 19, the beneficiary of the loan does not execute the obligations, the mortgage credit contract is considered to be terminated at full right and the entire amount of the credit rates with the related interest becomes exigible.
Art. 21. - The mortgage loan contract, as well as the subsequent real and personal guarantees, constitute executory titles, and shall be invested with the enforceable formula by the court of the place where the real estate is located.
Art. 22. - (1) The execution of the debtors shall be done without its conditioning by the assignment of another living space.
(2) In special cases, the court of the place of enforcement may grant a term of maximum 90 days in which the debtor will find another home. This provision applies only to natural persons.
Art. 23. - Execution of mortgage or insured claims according to art. 1.737 of the Civil Code shall be made by the own executors of the authorized financial institutions or by the bailiffs, as the case may be, according to the law.
Assignment of mortgage and insured claims and transformation
Art. 24. - (1) The mortgage and insured claims according to art. 1.737 of the Civil Code, which are part of the portfolio of a financial institution authorized by law, may be assigned to financial institutions authorized to act on the capital markets.
(2) The assignment concerns only the mortgage receivables in the portfolio held, which have common characters related to their nature, origin and their risks.
Art. 25. - (1) Based on the portfolio of mortgage and insured claims according to art. 1.737 of the Civil Code, the competent financial institutions will be able to issue negotiable securities on the capital market. Securities will be issued within 75% of the portfolio's holdings.
(2) The securities issued by the authorized financial institutions shall be subject to the provisions of Law no. 52/1994 on securities and stock exchanges.
Art. 26. - The assignment of mortgage receivables shall be notified, within 10 days after its execution by registered letter, by the financial institution assigned to the dispositor.
Art. 27. - If the authorized financial institution and the transferor do not decide otherwise, the repayment of the mortgage loans will be made further by the assigning institution, which will transfer to the financial institution the sums thus obtained. The expenses generated by this operation will be borne by the transferee within the limits of the amounts established by the act of assignment of the respective portfolio.
Art. 28. - If the assigning institution continues to receive the repaid amounts, the execution of the mortgages and the privileges according to art. 1.737 of the Civil Code will be made by the latter in the name and for the assigning institution at the expense of the latter.
Art. 29. - In order to attract the necessary funds for the granting of mortgages, the financial institutions authorized according to the law may issue, in accordance with the Law no. 52/1994, bonds based on the portfolio of mortgages or privileged holdings.
Art. 30. - Mortgage bonds may be issued up to 60% of the value of the portfolio.
Art. 31. - Mortgage bonds are securities and will be traded on authorized capital markets.
Art. 32. - Authorized financial institutions shall constitute a mortgage bond guarantee fund, which shall be used under the conditions laid down in its instruments of incorporation or organization.
Art. 33. - (1) The authorized financial institutions are under the prudential supervision of the National Bank of Romania and under the supervision of the National Securities Commission regarding the issuance of bonds.
(2) The authorized financial institutions are subject to the control of the institutions authorized by law.
Art. 34. - Within thirty days from the date of entry into force of this law, the National Bank of Romania and the National Securities Commission shall develop common methodological norms for the application of this law.
This law was adopted by the Senate in the meeting of November 15, 1999, in compliance with the provisions of art. 74 par. (2) of the Romanian Constitution.
This reproduction is consistent with the original.
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