Palestine Monetary Authority

Palestine Monetary Authority

Circular No. (2011/94)

To all banks operating in Palestine

Date: Tuesday, May 31, 2011

Subject: Clarifications Regarding the Reporting of Demographic Data for Housing and Mortgage Loans

In continuation of our Circular No. (2011/64) issued on 19/04/2011 concerning the establishment of a dedicated database for housing and mortgage loans, and following the field visits conducted at banks to monitor progress and take necessary measures to complete the project, the following clarifications address the inquiries and observations discussed during these visits:

1. Reporting of Housing and Mortgage Loans
   The periodic reporting of the demographic file for housing and mortgage loans includes all outstanding loans as they stand on the reporting date.

2. Facility File Number
   The facility number is a key element in linking the demographic file with the financial file of housing and mortgage loans. Therefore, we emphasize the necessity of ensuring that the facility number reported in the demographic file matches the corresponding loan file number in the monthly financial file.

3. Items Containing Amounts
   All values must be reported in the currency of the loan disbursement, except for the borrower's income currency, which shall be reported in the actual currency of the income.

4. Exchange Rate
   The currency exchange rate bulletin issued by the Palestine Monetary Authority shall be used for currency valuation as of the reporting date.

5. Settled Loans
   Settled loans shall not be disclosed in the demographic file for housing and mortgage loans, as settlement is recorded in the monthly financial file.

6. First or Multiple Mortgage Liens for the Same Bank
   In cases where a real estate collateral is pledged with first or multiple liens in favor of the same bank, only the first lien rank shall be reported in the lien rank item, while the total value of all lien ranks shall be disclosed in the lien value item.

7. Reporting of Appraised Value for Securitization Purposes
   Compliance with Circular No. (2011/93) issued on 25/5/2011 regarding mandatory and non-mandatory items in the reporting of housing and mortgage loans.

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8. Property Area
   Area reporting shall be in square meters.

9. Debt-to-Net-Income Ratio
   Debt-to-Net-Income Ratio = Monthly Installment Value / Borrower's Monthly Net Income or Average Income of Loan Participants, valued in the loan disbursement currency.

10. Percentage Sign in the Monthly File
    The file shall report the whole number without decimals or the percentage sign (%) (e.g., 65 instead of 65% or 0.65).

11. Collateral Value Secured Against Multiple Loans
    The collateral value provided by the borrower to the bank against multiple loans shall be calculated proportionally based on the credit limit granted for each loan.

12. Joint Loans
    The demographic file shall report joint loans by disclosing only one of the co-borrowers, as selected by the bank. The monthly income item shall report the combined income of all loan participants. This condition does not apply to the Credit Information System instructions.

13. Grace Period
    The grace period shall be reported in months, not days.

14. Financing Term
    The financing term shall be reported in months.

15. Reporting for a Loan Purposefully for Purchasing Land to Construct a Property
    This type of loan shall initially be reported for the purpose of land purchase. Upon completion of the property construction, it shall be reported as a full mortgage loan for the entire financing amount.

16. Nature and Value of Borrower's Income
    If the borrower has multiple income types (fixed and variable), the income nature shall be reported as fixed income, and the income value item shall report the combined value of both fixed and variable income.

17. Personal Loans Secured by Real Estate Collateral
    Personal loans or others secured by real estate collateral, where the purpose is non-residential or non-real-estate, are considered non-targeted loans and shall not be disclosed in the demographic file.

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