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. Last Updated: 07/27/2016

Duma Urged to Pass Mortgage Legislation

Delaying a package of laws on mortgages until next year would postpone their introduction for several years, the head of the State Duma committee for the development of mortgage loans told the chamber last week.

Committee chairman Ivan Grachyov urged deputies to pass the legislation, which covers mortgage securities, construction banks and addresses investors' rights in construction and home ownership. "It's clear that these delays have nothing to do with disagreements in the Duma," he said at a Nov. 26 hearing. "There are a lot of technical matters, and unfortunately these have created significant changes to the laws."

Nevertheless, there is general agreement on the laws, Grachyov said, adding that he had expected the package would have been already passed. Grachyov has been involved in putting together the mortgage package since the late 1990s.

If the legislation is passed, Alexander Semenyaka, head of the Agency for Housing Mortgage Lending, said the State Pension Fund would be able to invest in mortgage securities starting June 1.

"If the law is not passed in time and the assets of the Pension Fund cannot be used, I think the voters will be disappointed," he said.

Semenyaka said state bonds are valued at about 14 percent per year and corporate securities from blue-chip companies such as Gazprom and Unified Energy Sysyems at 18 percent to 19 percent per year.

"We need this law so we can have a lower interest rate than corporate securities, one closer to state bonds -- about 15 percent to 16 percent a year," he said.

The agency wants a credit rating that will attract investors through mortgage securities and provide ruble-denominated loans at an initial 18 percent interest rate. The loans will be used to refinance regional mortgage programs with long-term low-interest finance.

Vladimir Gasyak, head of DeltaCredit Bank's legal department, said a law that allows for refinancing is essential to attract investment in mortgages. The law needs to protect the rights of investors and should state that commercial banks are allowed to issue mortgage securities, he said.

DeltaCredit, which received funds originating from the U.S. Congress, has pioneered mortgage programs in Russia and has loaned more than $42 million to homeowners. It plans to issue its own mortgage securities after its portfolio reaches $100 million, probably at the end of 2003.

Gasyak said the package of laws is not perfect, but delaying them would be worse than passing them and addressing the flaws with amendments.

Alexander Kazakov, head of the mortgage agency's legal department, said all the operations written in the legal package are already technically possible, but in their present form they have not kick-started the national mortgage market. "People are not using the laws," he said.