Chairman and Managing Director of El-Taamir Mortgage Finance Co – Al-Oula ‘Allowing mortgage companies to practice leasing activities, establish and manage real estate funds is inevitable ... Package of legislation to resolve mortgage finance problems ... Reduce retained liquidity ratio to maximize the return.' Hassan Hussein, Chairman and Managing Director of El-Taamir Mortgage Finance Co – Al-Oula, said that the Egyptian economy currently needs to adopt a package of urgent legislation during the current period, as it will fall within the competence of the Egyptian president to contribute in overcoming obstacles for the investor and to stimulate the economy again, concerning mortgage activities, which face many challenges currently. Hussein told Amwal Al-Ghad that there are many problems facing El-Taamir Mortgage Finance companies now, notably the absence of political officials for the mortgage companies file, suggesting that a committee should be formed, headed by the Minister of Housing, Memberships Chairman of New Urban Communities Authority (NUCA), eight heads of mortgage companies, the head of Mortgage Refinance Company (MRC) and Chairman of the Guarantee and Subsidy Fund (GSF). Hussein added that the main target for the committee to be established is to review problems that face the companies, propose solutions that can be implemented on the ground, as well as identifying the required legal amendments and submitting them to the President for approval and activation as soon as possible. He pointed out that there is competition in the mortgage finance market including the developers, banks, and the mortgage companies, as the developer would review the financing of buyers of unit by establishing a project for seven years, while the banks are providing financial services through a flexible program because of the huge liquidity. The mortgage companies are facing a high-cost funding dilemma; the inability to finance since the start of the project, strict conditions from the Egyptian Financial Supervisory Authority (EFSA) and low capital in comparison to competitors in this field. He suggested avoiding this dilemma by studying a number of commercial and financial alternatives, which permit the mortgage companies to finance buyers since the start of the project and also apply to NUCA's projects throughout the Consortium, which consists of a real estate and bank developers, a mortgage finance company to finance the buyers, in order to let the bank finance the real estate developer and the mortgage finance company finance the buyers since the start of project. He also called for amending the NUCA's law, so as to give it the right to establish a sector which handles the registration, according to the latest global systems, with the exception of real estate law, and the law on the system of real estate registry. Hussein said the liquidity proportion determined by mortgage companies is up 25% – a high-rate – which will affect the unused capital in mortgage activities, therefore, the company and the society would not benefit, compared to 10% of the commercial banks, which are expected to be drawn upon, whereas the mortgage companies do not face any daily draw-downs, suggesting that this ratio is reduced to be on a par with the commercial banks, up to 10%. On the non-performing debts, Hussein emphasized that his company has set aside on the overdue premiums for one month; the ratio will surge by 20% for two delayed premiums, and 50% if the customer delays in paying three premiums; the company will set aside 50%. He also suggested to the EFSA in order to resolve this dilemma to explain that the debt would be faltering after 90 days passed or according to the company's policy. Hussein urged adding a special section regarding mortgage finance law, including the activation of a secondary market for the real estate stock market, refinancing and securitization companies. He proposed equality with the leasing companies under law no. 95 for the year of 1995 Issuance of the Regulations regarding the leasing, which states the finance premiums deductible when determining the tax base of the borrower in addition to allowing mortgage companies to exercise leasing activities for the buyers, as well as allowing for the mortgage companies to practice leasing activity of real estate projects so as to raise their capital to EGP 100 million. Hussein further confirmed the necessity of permitting mortgage finance companies to establish and manage real estate funds to determine the necessary capital and the required procedures as soon as possible, which will contribute in developing the finance mortgage system.
