Circular No. 1161 — Clarifications on Housing Finance Conditions in the Housing Financial System

CIRCULAR NO. 001161

To
Real Estate Credit Companies, Savings and Loan Associations, and Savings Banks

We communicate that the Board of the Central Bank decided to clarify the following points regarding the recent deliberations of the National Monetary Council on housing financing granted by financial agents in the Housing Financial System (SFH):

a) The unit value of financing, comprising principal, rates, and insurance, for housing financing under the conditions of item II, letter "a", of Resolution No. 1,221, of November 24, 1986, shall not exceed:

I - 5,000 (five thousand) National Treasury Obligations (OTN); and

II - 90% (ninety percent) of the appraised value or the purchase and sale price, whichever is lower;

b) In credit operations that bind entrepreneurs and builders as borrowers, financing of up to 100% (one hundred percent) of the direct construction cost shall be admitted, provided that the limit of 5,000 (five thousand) OTN per housing unit is observed;

c) In loan operations for isolated constructions, financing of up to 100% (one hundred percent) of the direct construction cost shall be admitted, subject to the ceiling of 5,000 (five thousand) OTN, provided that the appraised value of the land plus the construction cost do not exceed the limits set forth in items 2 and 3 of Circular No. 1,110, of January 21, 1987;

d) In cases of financing carried out with the participation of Promoting Agents without profit motive, financing to the final borrower equivalent to up to 100% (one hundred percent) of the housing investment shall be admitted;

e) The pass-through of financing as permitted by Resolution No. 1,254, of January 28, 1987, may be carried out based on production financing contracts entered into before November 24, 1986;

f) Housing financing may be granted, within the conditions of the SFH, for properties constructed outside the municipality or Metropolitan Region where the purchaser resides, provided that the production financing contracts were entered into before November 24, 1986;

g) The percentage contribution to the Wage Variation Compensation Fund (FCVS) shall be due:

I - monthly by borrowers with contracts governed by the Professional Category Salary Equivalence Plan (PES), calculated on the basis of 3% (three percent) of the value of the amortization and interest installment, plus the Salary Equivalence Coefficient (CES);

II - quarterly by financial agents, calculated on the basis of 0.025% (twenty-five hundredths of a percent) of the value of the balance of financing granted to borrowers;

h) The maximum effective interest rate of 12% (twelve percent) for financing to final borrowers, as set forth in item V of Resolution No. 1,221, of November 24, 1986, is applicable to any value of financing granted;

i) The Salary Equivalence Coefficient (CES) used for the purpose of calculating the monthly financing installment shall be 1.18 (one whole and eighteen hundredths), which shall also apply to the monthly premiums of the insurance provided for in the Housing Insurance Policy;

j) The granting of financing is linked to proof that the first monthly charge, including amortization, interest, insurance premiums, and fees, shall not exceed 25% (twenty-five percent) of gross family income;

l) The contracting of new financing, under the conditions established for the SFH, may only be carried out through contracts that provide for full salary equivalence and an amortization system using the "tabela price";

m) In housing financing contracted, the amortization resulting from the payment of installments must be subtracted from the outstanding balance of the financing after its monetary update, even if both events occur on the same date;

n) The maximum financing term shall be 15 (fifteen) years, regardless of the financed value.

2. Insurance regarding the property and the borrower shall be included in the SFH Housing Insurance Policy only in operations regulated by Circular No. 1,110, of January 21, 1987.

3. Transfers of SFH financing contracts shall be carried out by granting new financing to the purchaser, under the conditions established for the said System, maintaining the original classification (new or used), if:

a) there is no additional disbursement of resources;

b) there is an additional disbursement of resources and the financing remains within the limit of 5,000 (five thousand) OTN.

4. Financing contracts resulting from the application of the letter "b" of the previous item shall be classified, for the purpose of calculating the limit, under the conditions of the SFH, maintaining the original classification.

5. Housing properties financed by the SFH, when received in payment in kind, adjudicated, or auctioned by the financial agent, may be subject to new financing under the conditions of the said System, receiving treatment identical to the cases of final borrower transfers cited in items 3 and 4 of this Circular.

6. Financing already granted under the auspices of the SFH and not governed by the norms contained in the regulations issued by the National Monetary Council and complementary norms of this Central Bank, continue to be computed in the operations of the said System, for the purpose of calculating the allocation limit set forth in letter "a" of item II of Resolution No. 1,221, of November 24, 1986.

7. Housing financing granted under the auspices of Circular No. 1,110, of January 21, 1987, may only be made to applicants who do not hold another housing financing under the conditions established for the SFH, in the municipality or metropolitan region of their domicile or outside thereof.

8. Housing financing not classified under the conditions of this Circular may be financed in the manner set forth in letter "b" of item II of Resolution No. 1,221, of November 24, 1986.

Brasília-DF, April 24, 1987

Luiz Carlos Mendonça de Barros
Director