Regulatory Alerts2022-05-31
Order on Valuation of Mortgages and Loans in Real Estate as Security for the Issuance of Covered Bonds
The Danish Financial Supervisory Authority issued this order to establish strict valuation standards for real estate securing covered bonds, requiring institutions to assess reasonable cash market values independent of priority rankings. It mandates rigorous inspection protocols, documentation of specific financial assumptions, and the use of standardized profitability calculations for different property categories to ensure accurate loan-to-value ratios. The regulation further restricts the inclusion of certain assets in the lending base and imposes detailed reporting requirements to maintain financial stability and compliance with EU directives.
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