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. Last Updated: 07/27/2016

Banks Offer More Loan Restructuring

After the Agency for Mortgage Restructuring began offering help to home mortgage borrowers, banks have begun offering their own, more attractive options for those who have lost all or some of their income, said Andrei Yazykov, the agency's general director.

Yazykov estimates that there are presently some 540 billion rubles ($17.3 billion) worth of mortgages on banks' balance sheets, and banks have restructured some 5 percent of this sum, or about 30 billion rubles, on their own. "If all of these borrowers came to the agency for help, the agency would have been forced to spend 6 billion rubles on providing them with stabilization loans," Yazykov said.

The banks' initiative helps the agency minimize spending and means that fewer applications will be submitted than originally expected. So far, the agency has spent less than 1 billion rubles helping mortgage recipients, he said.

Banks have created decent programs for borrowers, whether it be an extended term of the loan, a grace period during which the borrower pays just a small portion of the monthly sum (up to 1 1/2 years at Moskommertsbank), or changes in interest and principal ratios, said Lyudmila Lebedeva, deputy chairman of Moskommertsbank's board of directors.

So far, her bank has only restructured a few dozen loans, but hundreds of other applications are being processed.

Bank of Moscow has restructured about 5 percent of its mortgage portfolio, which at present amounts to nearly 25 billion rubles, the bank's press service announced. VTB-24 has restructured about 2.26 percent of its mortgage portfolio, which is about 180 billion rubles (including its own, purchased and securitized loans), said Mikhail Berezov, the bank's financial director.

There are a few reasons why banks are comfortable with helping the debtors on their own, Yazykov said. Banks are trying to avoid re-evaluating the borrower's credit score so that no additional reserves have to be set aside.

In addition, a loan issued by two different lenders -- when issuing a stabilization loan, the Agency for Mortgage Restructuring becomes the bank's co-creditor -- cannot be refinanced, and it will remain on the bank's balance sheet for a long time, Yazykov said.

Banks are concerned, however, that borrowers who receive assistance now will default on their loans again in the future. The situation for borrowers is so difficult that banks are trying to help them sell their mortgaged homes, even at a discount. The agency estimates that some 30 percent to 40 percent of borrowers whose loans have already been restructured may default a second time.