Interpretations of Exemptions from Concrete Construction Plans for Individuals' Land Loans

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Title：

Interpretations of the terms and conditions that individuals’ land loans can be exempted from providing concrete construction plan in pursuant to "Regulations Governing the Extension of Housing Loans in Specific Areas and Land Loans by Financial Institutions"

Announced Date： Promulgated on Auguest 2, 2011

Abolished Date：

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1.

1. An application for land loan by an individual that is secured by land in an urban planning residential or commercial district and meets all of the following conditions (as verified by the lender) may be exempted from the requirement of providing concrete construction plan as stipulated in Subparagraph 1, paragraph 1, Article 5 of the “Regulations Governing the Extension of Housing Loans in Specific Areas and Land Loans by Financial Institutions”:

(1) The borrower is not involved in investing or purchasing real estate or house construction.

(2)The borrower provides a statement to the lender that the loan proceeds will be used for personal expenses or financial management.

(3)The borrower provides an undertaking to the lender that he/she agrees to be subject to the terms for a breach of contract as provided in the loan agreement if he/she has provided an untruthful statement or the lender finds out later that he/she fails to use the loan proceeds as stated.

2.

2. The maximum amount of individuals’ land loan mentioned above shall not exceed 65 percent of the amount determined according to the following methods :

(1)For loan applications made on or after December 31, 2010: The amount shall be the land acquisition cost or its appraised value from the lender, whichever is lower. However if the land is acquired by the borrower through inheritance, gift or reasons other than transaction, or if the registration of land title transfer occurred prior to December 31, 2009 and no documents to prove the cost of transaction are available, the amount may be the appraised value of the land.

(2) Applications made on or after December 31, 2010 for extension of existing land loans: The amount shall be the original appraised value of the land.

Existing land loans mentioned in subparagraph (2) of the preceding paragraph with loan-to-value ratio exceeding 65 percent are given at maximum a one-year adjustment period from the date of loan extension to make the loan-to-value ratio not exceed 65 percent of the land’s original appraised value at the end of the adjustment period..

3.

3. Financial institutions should implement the following supporting measures of individuals’ land loans:

(1)The financial institutions should step up the pre-loan credit check (to verify the borrower’s identity and purpose of loan) and post-loan credit management (including following up whether the use of loan proceeds is consistent with that undertaken by the borrower and enforce the breach of contract provisions) of those loan cases.

(2)The internal audit unit of financial institutions should include the credit check and management of such cases in the focus of internal audit.