Directions Governing Loans Extended by Financial Institutions Using the Central Bank's NT$100 Billion Earthquake Reconstruction Loan Fund

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Title：

Directions Governing Loans extended by Financial Institutions Using the Central Bank's NT$100 Billion Earthquake Reconstruction Loan Fund Following the Promulgation of the Temporary Statute for 921 Earthquake Post-Disaster Reconstruction

Amended Date： April 21, 2000

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1 Where an earthquake victim's original home loan was through a financial institution other than the 105 financial institutions specified in the original directions, such as life insurance companies (including the Postal Remittances & Savings Banks' Department of Basic Life Insurance) , investment trust companies, or certain other banks and grassroots financial institutions, and where, following the implementation of the Temporary Statute for 921 Earthquake Post-Disaster Reconstruction, such financial institutions arrange for assumption of the balance of the loan or subsidization of the interest, or handle loans for home purchase, home reconstruction, or home repair, disbursement of funds by the Central Bank referred to as the "Bank") shall be exclusively in the form of interest payment subsidies, and not disbursements of principal.

Explanation:

(1) According to the provisions of the Bank's circular on March 8, 2000 related "Frequently Asked Question " , application may be made to the original lending financial institution to assume the outstanding balance of an original home loan for a house damaged in the earthquake, or to arrange interest payment subsidies from the Bank on the outstanding balance of the loan. If a balance still remains, further application may be made for a home purchase or home reconstruction loan from the NT$100 billion Earthquake Reconstruction Loan Fund; such applications may be filed only with the original lending financial institution. The 105 financial institutions originally announced by the Bank (44 banks, 14 credit ooperatives and 47 farmers associations) do not comprise the entirety of the financial institutions through which the preexisting loans on damaged homes were obtained.

(2) Following the inclusion of life insurance companies, investment trust companies and other lending financial institutions that were not included in the scope of the Bank's original announcement, where such financial institutions assume the balance of the original loan or arrange interest subsidies, the Bank will remit the interest subsidies or interest relief disbursements into the financial institution's account with the Bank or other designated account based upon an itemized monthly report filed with the Bank via mail by the financial institution. Where such financial institutions handle home purchase or home reconstruction loans for earthquake victims, the Bank will not make disbursements for the principal amount, which shall be paid instead by the financial institutions from their own funds. The terms and conditions of such loans shall be in accordance with directions concerning preferential home loans for 921 earthquake victims, and the Bank shall disburse only subsidies on the interest rate differential.

(3) The Bank agrees that earthquake victims whose homes are partially collapsed but not demolished, or show cracking damage, may also apply for a home repair loan with the newly included original lending financial institutions. The method of fund disbursement shall be the same as that set forth in the preceding paragraph:the Bank shall not make disbursements of principal, and shall disburse only subsidies on the interest rate differential.

2 Where an earthquake victim had originally applied for principal and interest deferral with his original lending financial institution loan pursuant to Ministry of Finance directions, and subsequently seeks to apply instead for assumption of the loan or interest rate subsidies, the Bank's interest relief or subsidization shall be retroactive to February 5, 2000.

Explanation:

(1)According to the Bank's circular on March 8,2000 related "Frequently Asked Questions" , an earthquake victim who has carried out loan principal and interest deferral procedures pursuant to the Ministry of Finance Regulations for Deferrals of Original Loans for 921 Earthquake victims shall not be eligible for concurrent ap-plication of provisions for assumption of the loan by the lending financial institution or for the Bank interest subsidies. Earthquake victims must choose between either the Ministry of Finance deferral plan or the plan involving interest subsidies by the Bank or assumption of the loan by the lending financial institution. If an earthquake victimhas already applied with the lending financial institution for principal and interest deferral and subsequently wishes instead to have the financial institution assume the balance of the loan or to apply for the Bank interest subsidies, the earthquake victim must apply to the original lending financial institution for termination of the deferral. From the time the interest relief or subsidies begin, the Ministry of Finance deferral provisions shall no longer apply. The time of commencement of the relief or subsidies shall be retroactive to 5 February of this year.

(2) For earthquake victims applying for the Bank interest subsidies, the applicant and the original lending financial institution shall negotiate among themselves the terms of payment for any interest accrued for the period from February 5,2000 until the day the financial institution approves the subsidies.

3 Where an earthquake victim has applied for a home purchase or home reconstruction loan and in cases where the original floor-space restrictions limit the value of the loan application to less than the maximum ofNT$3.5 million, according to the new provisions announced by the Bank on 8 March of this year, the applicant may further apply to increase the amount of the loan based upon the financial institution's value appraisal and the amount already appropriated. Application of preferential interest rates on the additional portion of the loan shall begin upon the day of authorization of the additional loan amount by the lending financial institution.

Explanation:

(1) This Bank's original floor-space restriction provisions had blocked some earthquake victims from receiving the preferential interest rate on the entire amount of funds borrowed or rendered the preferential rate inapplicable within the maximum loan level of NT$3.5 million. Following the Bank's circular onMarch 8, earthquake victims may immediately apply, within the NT$3.5 million maximum for each family, for additional funds at the preferential interest rate based upon the financial institution's appraisal value minus the amount of the funds to which the preferred interest rate already has been applied.

(2) Regarding the timing of the application of the preferred interest rate to the difference, calculation at the preferred rate shall began on the day the earthquake victim applied to the financial institution for approval. The expiry date shall be the same as the expiry date of the originally approved loan. The earthquake victim shall be liable for payment of the interest differential where the original lending financial institution has made disbursements out of its own funds.

4 Where an earthquake victim has already obtained a 921 Earthquake Home Purchase or Home Reconstruction Loan and the total amount is less than the NT$3.5 million maximum, application may be made to apply the difference between the loan amount and the NT$3.5 million maximum to an application for assumption of the outstanding balance, or the Bank interest rate subsidization, on the original loan. However, such application shall be made to the original lending financial institution for the damaged home.

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5 Where a damaged home is shared by multiple owners (such as in traditional Chinese courtyard houses or each floor of a multi-story house) and each independent household within the home can prove the fact of independent residence (independent household registration, separate utility contracts) and attach proof of the damage to the home, and where such damage is surveyed and verified by the lending financial institution, each such household is entitled to apply to the financial institution for a home purchase or home reconstruction loan (maximum of NT$3.5 million per household) or a home repair loan (maximum of NT$1.5 million per household).

6 Where an earthquake victim arranges for a home purchase or home reconstruction loan or applies for the Bank interest subsidies on the remaining balance of their original home loan, when paying off the principal within the NT$3.5 million maximum, if the remaining principal balance is in excess of NT$1.5 million, that portion subject to the higher interest rate (3%) shall be repaid first, and then the interestfree portion shall be repaid. That is, in paying interest rate subsidies on earthquake victimloans, the Bank shall pay subsidies at the rate of 5.35 percent (the floating interest rate on one year postal time deposit minus zero) on the portion of the loan balance of NT$1.5 million or less , and 2.35 percent ( the floating interest rate on one year postal time deposit minus three percentage points) on any portion in excess of NT$1.5 million.

7 For home loans originally granted short-term extensions by grassroots financial institutions, where an earthquake victim applies to have the grassroots financial institution assume the balance of the original loan, the time limit on the Bank's subsidization shall be 20 years, less the number of years of the term of the earthquake victim's home loan (including the number of years of extension already granted), plus five years, to a maximum of 20 years; where an earthquake victim applies to the Bank for interest payment subsidies on the remaining balance of the original loan, the time limit on the Bank's subsidization shall be 20 years, less the number of years of the term of the earthquake victim's home loan ( including the number of years of extension already granted). The principal amount upon which the interest subsidies are paid shall be calculated on the basis of an average progressive decrease of the principal amount over the number of years of the subsidization.

8 Grassroots financial institutions handling home purchase, home reconstruction, or home repair loans shall handle such transactions in accordance with the directions of the Bank. The maximum loan term shall be 20 years, payments of principal and interest on which shall be deferred for the first three years. Beginning from the fourth year , payments of the principal and the entire interest for the loan term shall be made in equal installments and may not be made on a short-term rolling basis.