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Number of bank foreclosures up 20 pct in six months

Romanians have an increasingly harder time attempting to pay their bank installments, show official statistical data; figures reveal that foreclosures advanced by over 20 pct in the last six months, whereas 40 pct of the total retail loans are secured on property, reports daily Financiarul.

Georg Kovacs, Managing Director of claim recovery firm EOS KSI Romania, considers that the banks proceed with increased frequency to debtor foreclosures. 'We noticed a rise in the number of foreclosures in the past six months. According to our estimations, the advance was about 20 pct.'

Previous to October 2008, the average estimated number of homes sold annually - directly, auctioned by banks or sold via claim recovery firms - stood at 5,000 (about 2 pct of total mortgaged homes). There are currently more than 6,000 homes put up for auction out of a total of 250,000 mortgaged homes), reports the paper.

Yet the experts say that banks are not so eager to foreclose upon bad debtors. 'We noticed that banks are not highly interested in foreclosing upon their defaulting clients. First because a bank that registers several foreclosure cases has its image and credibility dimmed in the eyes of the clients. Secondly, the bank cannot recover too much through the foreclosure procedure, because of the plummeting selling prices and the decrease in the number of interested clients. In particular cases, the bank could even be at loss because of the difference between the initial investment and the amount recovered from the sale of the property,' added Georg Kovacs.

In their turn, ING Bank representatives said that it is preferable to recover the loan otherwise than by foreclosure. 'Foreclosing a building is a quite lengthy process. In the first place, the banks do not proceed to foreclosure but after they have run out of all methods of amiable recovery. This implies a term of three months at least since cease of payments by the borrower. Legal procedures take another three, six or even 12 months,' said ING representatives.

With the number of bad debtors on the rise, the bankers contemplate the expansion of the term assigned to each stage and debt rescheduling.

As for the selling price, this is a far cry from what it was at the moment the mortgage was established and banks run the risk of failing to recover even their initial investment, let aside making profit.

The latest data supplied by the National Bank of Romania (BNR) shows that on January 31, 2009 retail credits stood higher than RON 103 bln (some EUR 25.75 bln) of which some RON 42 billion (about EUR 10.5 bln) loans in domestic currency and RON 63 bln (some EUR 15.75 bln) loans denominated in foreign currency.

Mortgage credits accounted for 21.7 pct of the total, whereas consumption loans covered the rest to the 42 pct share represented by property-secured loans.

Past due payments increased 260 pct in one year and the share of unpaid debts of total disbursed loans doubled over the same period, reports the paper citing BNR data.

 

Sursa: http://www.rompress.ro

Tags: loans banks number total months foreclosures bnr ing