Regulatory Alerts2017-03-08
Acquisition of Real Estate Finance Assets or Rights Arising from Mortgage Finance Companies
The Arab Monetary Fund has issued a circular permitting banks and murabaha companies to acquire real estate finance assets or related rights from mortgage finance companies, provided the outstanding financing amount does not exceed 85% of the property value for first-home contracts with partial or no recourse. The directive mandates continued compliance with prior circular No. 371000064719 for non-first-home financing and explicitly validates acquisitions under both recourse and partial-recourse disposal structures. Domestic financial institutions must apply these parameters when executing acquisition agreements with licensed mortgage finance entities.
In the name of Allah, the Most Gracious, the Most Merciful
Arab Monetary Fund
Headquarters
Banking Policies Department
No. :
Circular
381000061976 : No.
1438/06/09 AH : Date
Attachments:
Respected / Excellency,
Greetings,
Subject: Acquisition of Real Estate Finance Assets or Rights Arising from Mortgage Finance Companies.
With reference to the Fund's Circular No. 381000039082 dated 1438/04/10 AH regarding the increase of the maximum limit for real estate finance granted by banks and murabaha companies to citizens for purchasing their first home, and the Fund's Circular No. 371000064719 dated 1437/06/07 AH regarding the acquisition of real estate finance assets from mortgage finance companies or rights arising therefrom, and since some banks have been contracting with mortgage finance companies to acquire real estate finance assets or rights arising therefrom,
I wish to inform you that there is no objection to a bank acquiring real estate finance assets or rights arising from such assets, in cases of disposal without recourse or with partial recourse under the first-home financing contract for citizens, provided that the outstanding finance amount for these assets (or arising rights) at acquisition does not exceed 85% of the property value, while confirming continued compliance with Circular No. 371000064719 dated 1437/06/07 AH when acquiring real estate finance assets or arising rights for financing contracts other than the first home for citizens.
For information and compliance.
Yours sincerely,
Mr.
Ahmed bin Abdullah Al-Sheikh
Deputy Governor for Supervision
Distribution Scope:
- Banks and murabaha companies operating in the Kingdom.
- Mortgage finance companies operating in the Kingdom.