The Board of Directors at Egypt's Financial Regulatory Authority (FRA) has approved amendments to some provisions of the Mortgage Finance Law No 148 of 2001. The amendments aim to resolve problems that have arisen related to the mortgage processes. The provisions being amended had facilitated the acquisition of housing units for citizens, but the practical application of this law has revealed some shortcomings. In a statement issued on Sunday, the FRA said that the most prominent obstacles preventing the law's application relate to the mortgage process for units financed by the mortgage system. FRA Chairperson Mohamed Omran said the amendments include the creation of a new electronic registry which allows mortgage finance firms to publicise the finance agreements concluded between them and beneficiaries in this registry for a specific period. The publicising period would remain until the procedures for registering the real estate unit are completed. "The registry grants some advantages aimed at protecting the rights of the financiers in the period in which the guarantor property has not yet been registered in the land registry office," Omran said, "They include ensuring that the financing agreement declared effective against others once announced, and grants the power of the executive bond." He added that the proposed draft amendments included some detailed provisions regulating the mechanism of work of this electronic record. This includes the possibility of obtaining certified copies of the data declared in the register, considering that the data related to the time and date of publication and the date certified by the registry have the authority of official documents in terms of proofs. The amendments also relate to the practical cases in which the financing parties waive their rights towards their clients. This will take place in favour of other parties licensed to practice real estate financing or real estate refinancing activities. Omran added that the draft law has introduced a new provision that allows for the usufruct right to be extended to heirs of those who obtained financing to purchase the right to use real estate from one a licensed party. This can happen if they agree to this and continue the contract with the real estate finance company. Under Article 13, a new provision has also been introduced that allows real estate finance agencies to issue a verdict rescinding the financing agreement. This would then allow them to recover the property subject of the agreement in case the investor breaches his contractual obligations. This would be the case where the financing agreement is undeclared electronically, and in cases of real estate finance contracts that use partnerships and Murabaha leasing. The market value of the property shall be determined by real estate appraisal experts registered with the authority. Moreover, the proceeds of the sale will be divided by the financier obtaining the full balance of the indebtedness on the date of dissolution, in addition to delay penalties and all expenses and costs incurred until the date of the sale. The remaining amount of the sale proceeds shall be fully refunded to the investor. The amended Article 7 of the Mortgage Finance Law, which allows investors to dispose of the guarantor property after the approval of the financing authorities. The draft amendments in that article stipulated prohibiting disposing of the guarantor properties by investors, whether by selling, gifting, leasing or other actions without obtaining the approval of the financier. Any such arrangement will result in the agreement's termination, which will also prevent disputes from arising between real estate financing bodies and investors.
