Regulatory Alerts1995-03-03
Added · Updated
Guideline 5.8: Credit Risk Management - Property Mortgage Lending
The Monetary Authority issues Guideline 5.8 to regulate mortgage finance schemes involving co-financing by property developers, which it identifies as higher risk due to reduced borrower equity. The Authority permits such arrangements only if authorized institutions maintain a first legal charge, cap lending at 70% of valuation, and strictly apply normal underwriting criteria including debt-to-income assessments. Institutions must also avoid indirectly financing developers, notify the Authority of co-financing limits, and ensure independent property valuations.
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