Fidesz forex solution to lift most preexisting conditions for borrowers
A bill of amendment submitted by two governing Fidesz party MPs proposes to lift most of the existing conditions for forex-based loan borrowers to avail with the so-called exchange-rate cap scheme.
One of the two MPs, head of Fidesz parliamentary group Antal Rogán said earlier today that a bill helping fx borrowers was to be submitted to Parliament later in the day, and could be passed as early as tomorrow.
In early September, the government gave banks November 1 as a deadline for a solution for troubled fx loan holders. It had said that it will submit its own solution if the banks fail to come up with a reasonable offer. Economy Minister Mihály Varga said, however, last Thursday that the government discussed the issue and came to the conclusion that an economic solution to the problem of fx loans could be made only after legal conditions are clarified.
Under the bill, submitted jointly by Rogán and MP György Balla, the exchange rate cap system would still apply to forex mortgages, and those against whom foreclosure was initiated would still not be able to join the system, just as at present.
Those with outstanding arrears of more than 90 days, however, would no longer be prevented from entering the scheme. Neither would be participation in other borrower assistance programmes a cause for exclusion, and the existing HUF 20 billion upper limit for the value of the original loan would no longer apply either.
The bill would also extend the moratorium on evictions to the entire winter period until April 30.
Under the exchange rate limit scheme, launched in May 2012, borrowers may opt to cap their repayments based on the limit for up to five years. The difference between the rate of repayment and market rates is placed on a separate account for repayment later. Interest costs on the separate account are covered in equal part by banks and the state.
The current bill does not affect the above sharing of interest cost. It does not propose any change in the fixed exchange rates (i.e. HUF 180 HUF/CHF 1, HUF 250 HUF/€1, HUF 2.5/JPY) at which banks calculate repayments under the scheme.
Hungarian households borrowed heavily in foreign currency when the forint was strong and forex-based loans were cheaper than forint ones. But the weaker forint raised repayments on the fx loans, causing the number of distressed borrowers to swell.
Some 150,000 families have arrears of more than 90 days but no debt collection procedures have been launched against them, and they would be willing to repay the loan, Rogán explained adding that it will not be compulsory for anyone to enter the scheme.
Rogán said that none of the banks had changed the loan contracts by the November 1 deadline. He added, however, that the Banking Association worked out a proposal and said the ruling Fidesz party shares the government's view that this proposal should be made public and consultations should be started with all affected parties.
In answering a question from local media, Rogán said it would be important for the Kuria, Hungary’s supreme court, to issue guidance regarding cases on fx loan contracts.
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