Clarifications Related to the Regime for Adjusting Mortgage Credits for Housing

CENTRAL BANK OF THE REPUBLIC OF ARGENTINA
COMMUNICATION "A" 274 11/01/83
TO FINANCIAL ENTITIES:
Ref.: Clarifications Related to the Regime for Adjusting Mortgage Credits for Housing

We address you to send you attached clarifications related to the provisions disseminated by REMON Circular - 1 - 80 (Communication "A" 265), which provide answers to questions raised by some entities.

We salute you very attentively.

CENTRAL BANK OF THE REPUBLIC OF ARGENTINA
Germán R. Pampillo
Deputy Manager of Standards for Financial Entities

Elías Salama
Deputy General Manager

ANNEX

C.B.R.A. CLARIFICATIONS RELATED TO THE REGIME FOR ADJUSTING MORTGAGE CREDITS FOR HOUSING
Annex to
Comm. "A" 274

1. QUESTION: Are the mortgage credits for housing eligible for refinancing in accordance with the provisions disseminated by Communication "A" 265 only those that are allocated to the Consolidated Loan?
   ANSWER: No, those affected to other sources of financing that meet the conditions provided in said regime are also included.

2. QUESTION: Can non-adjustable credits be refinanced?
   ANSWER: Yes.

3. QUESTION: Should the regular income of the borrower and the family group living with him be considered, for the purposes established in point 3.1 of Communication "A" 265, at its gross amount or net of current deductions?
   ANSWER: Gross income must be taken into account.

4. QUESTION: Are the incomes of the cohabiting family group computable, even when they are not obligated with financial entities?
   ANSWER: Yes, in all cases it is appropriate to take such incomes into consideration.

5. QUESTION: Does the exemption from payment of regular services of credits maturing in the months of January and February 1983 referred to in point 8.1 of the aforementioned communication include payments corresponding to December 1982?
   ANSWER: The payment exemption corresponds to those that must be made in January and February, independent of the periods to which they correspond.

6. QUESTION: Is the debt balance to be refinanced exclusively that referred to the capital adjusted to 31.12.82?
   ANSWER: No. That amount is used solely for the purpose of determining if the operation is included in the regime. The debt balances eligible for refinancing will be those determined at 31.12.82 by updated capital, plus adjustments and interest accrued until 26.2.83, plus other sums related to the operation that might be pending collection on this same date.

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7. QUESTION: Is it possible to demand in March of this year the payments not made in January and February?
   ANSWER: No. In the case of debtors who decide not to join the system, the unpaid services will be added to the total debt, distributing them among future installments.

8. QUESTION: Are the services of the refinanced debts adjustable or must they remain constant?
   ANSWER: The services must be adjusted, as a consequence of the update of debt balances.

9. QUESTION: Can amortization systems known as "French" or "German" be used for the determination of payment plans?
   ANSWER: Yes. The use of any of such systems is possible, at the option of the creditor entity.

10. QUESTION: What treatment should be given to debtors whose income level does not reach covering the payment of the interest of the installment or that, even if covering the interests, the resulting installment is so small that it forces to extend the term of the operation disproportionately?
    ANSWER: As a general principle, the minimum to be charged in concept of installment should cover, at least, the interests; however, it is recommended to entities tolerance in extreme cases such as the commented one, of strong temporary drop in income, entities must evaluate the feasibility of granting refinancing in such cases.