The government finally acknowledged that it is high time to send the support force to rescue borrowers and banks of the mortgage market. The inscription reads: "Mortgage."
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Govt to Rescue Mortgage Borrowers, Banks
Russia’s authorities came up yesterday with the first official statements about the elaboration of government’s measures to help the people unable to pay their mortgage credits because of financial turmoil and to rescue the banks that will face the surge in the overdue mortgage loans. Until yesterday, the leadership hadn’t acknowledged the mere existence of large-scale default in payment under the individual mortgage credits.
The news that the government is elaborating a package of actions to rescue the mortgage sector of crediting emerged yesterday, after the economic stabilization sitting at President Dmitry Medvedev. According to Finance Minister Alexei Kudrin, they are deliberating on additional actions to buy out the mortgage loans, Those actions are due to be set into motion before the end of this year, Kudrin specified, adding that the target to attain is improving the banks’ balance.
The sources close to the government say three options are being considered now, all of them provide for the appropriation of budget funds. The difference is in the end recipient of government’s help. Under the first scenario, the money will go to the Mortgage Lending Agency (AIZhK) for the buyout of mortgage loans raised by the individuals, who lost their jobs in the downturn.
The second variant suggests injecting the money into the government’s banks for the same purpose, while the third option is to extend a helping arm directly to the individual borrowers. The discussion is ongoing and the last-ditch decision is expected very soon, so that it could be added to the final bailout plan of the government that will probably emerge already December 5.
As of today, roughly 800,000 families in Russia have taken out the mortgage loans. The Russians have been raising such loans at large since 2002. That year, the overall amount was $300 million but it surged to $25 billion in 2007. According to Federal Registration Service, Rosregistratsiya, the number of mortgage contracts registered this year matches past year’s indicator. Rostregistratsiya has registered 773,200 contracts since the start of 2008, which corresponds to 94.52 percent of the contract number registered during the whole 2007.
www.kommersant.com
All the Article in Russian as of Dec. 04, 2008
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