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Chamber of Deputies adopted the changes to the debt discharge bill
The Chamber of Deputies on Wednesday adopted by a vote of 207 to 1 and one abstention the changes to the debt discharge bill following President Klaus Iohannis' request for the review of the piece of legislation.
The most important amendments refer to the removal from the bill of the "First Home" program and the raising of the cap on mortgage personal loans to 250,000 euros. Another amendment provides that the law also applies to persons who have been foreclosed on.
According to the bill passed on Wednesday, the borrowers convicted under a final ruling for crimes related to the loan the law enforcement is sought for cannot benefit from the law's provisions.
The debt discharge bill stipulates that people with housing loans can relinquish to the banks the mortgaged assets, if they cannot pay the loan installments.
The bill was adopted by the Senate, but the Chamber of Deputies is the decision-making body in this case.
The law on voluntary foreclosure passed by the Parliament on Wednesday does not have the social merits expected by the government, spokesman Dan Suciu commented.
Asked whether the government intends to challenge the law at the Constitutional Court, Suciu answered that the matter was not discussed in the Wednesday's sitting.
"I saw that the law on giving in payment has passed the vote of the Chamber [of Deputies]. It considered some issues the government had asked in order to enforce and clarify the social character of this bill. This was the government's main goal - we're talking about the 'First Home' programme [editor's note - state guarantee for specific loans], which must be eliminated, and about setting up a ceiling. We have other conditions, too. Unfortunately, it does not have a social character as enhanced as the government wanted, and reservations persists on its retroactivity, reserves also voiced by the Supreme Council of Magistracy and by the Justice Ministry. It is a project that cleared the Chamber, we have no further position right now on this law," he explained.
The plenary of the Chamber of Deputies approved on Wednesday some modifications to the law that allows debtors to settle bank loans by giving in payment their mortgaged real estate, with no further obligations. The law, vehemently criticized by banks, including the National Bank of Romania (the central bank) had been returned to the Parliament by President Klaus Iohannis, who refused to promulgate a first version.
The most significant changes eliminate the 'First Home' programme from the scope of the law, and raise the ceiling of retail credits to 250,000 euros; the law also applies to foreclosures enforced by the banks.
Romanian bank officials acknowledged the passage of a law on voluntary foreclosure by the Parliament, but warn about its negative impact on the economy as a whole; they asked the relevant institutions to notify the Constitutional Court on breach of the property rights and on the retrospective nature of the law.
The Romanian Banking Association (ARB) mentioned that similar messages have come from the European Commission, the European Central Bank, the International Monetary Fund etc. It insisted on the "severe systemic risk" identified by the National Bank of Romania (the central bank) in unpredictable laws.
"There are clear interpretations of the financial industry, the Presidency, the Romanian Government, the European Central Bank and of the Superior Council of Magistracy on the possible elements of unconstitutionality and moral hazard. These elements of unconstitutionality, together with changing or affecting legal contracts with banks in the past, will be taken into account by credit institutions on how they will react to the impact of this law," reads an ARB release.
The Council of Bank Employers in Romania is demanding "with full responsibility" that the relevant institutions exercise their prerogatives and notify the Constitutional Court of Romania about this law, in order to check its constitutionality.
The banks' representatives stress that all the unconstitutionality issues noticed repeatedly by both the banking community and the aforementioned institutions were ignored by Romania's Parliament and "subsist as such in the final form of the law passed by Parliament."