Regulations Governing the Extension of Mortgage Loans by Financial Institutions

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[Authorized Circulars]

Title：

Regulations Governing the Extension of Mortgage Loans by Financial Institutions

Inactive Regulations

Announced Date： June 24, 2010

Amended Date： Amended on September 19, 2024 (effective on September 20, 2024.)

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(Basis)

2. The Regulations are promulgated pursuant to Articles 28, 29 and 31 of The Central Bank of the Republic of China (Taiwan) Act, and Paragraph 2 of Article 37, and Article 40 of The Banking Act of the Republic of China.

(Definitions)

3. The terms used in the Regulations shall be defined as follows:

(1)“Financial institutions” shall include domestic banks, branches of foreign banks in Taiwan, credit cooperatives, Agricultural Bank of Taiwan, credit departments of farmers’ associations, credit departments of fishermen’s associations, Chunghwa Post Co., Ltd., and insurance companies.

(2)“Mortgage loans” shall include housing loans, land loans, unsold housing unit loans and idle industrial land mortgage loans.

(3)“Housing loans” shall include high-value housing loans and home loans.

(4)“High-value housing loans”shall mean mortgage loans extended by financial institutions to borrowers for purchasing houses (including the allotted land) of any of the following types where the building ownership certificates thereof contain the word zhu (住,“residential”):

a. Located in Taipei City with an appraised value or purchase price of NT$70 million or more;

b. Located in New Taipei City with an appraised value or purchase price of NT$60 million or more; or

c. Located in a domestic area other than Taipei City and New Taipei City with an appraised value or purchase price of NT$40 million or more.

(5)“Home loans” shall mean mortgage loans extended by financial institutions to borrowers for purchasing non-high-value houses (including the allotted land) where the building ownership certificates thereof contain word zhu (住, “residential”).

(6)“Land loans” shall mean mortgage loans extended by financial institutions to borrowers for purchasing land lots in a residential or commercial district demarcated in urban plans.

(7)“Unsold housing unit loans” shall mean mortgage loans extended by financial institutions to developers and secured by newly built unsold housing units (land allotments included).

(8)“Idle industrial land mortgage loans” shall mean mortgage loans extended by financial institutions to borrowers and secured by idle land in industrial districts.

(9)“Developers” shall mean entities engaging in real estate development activities, namely the investment and construction of real estate including land, buildings, and other structures, for sale purposes; or entities engaging in the construction of residential buildings in the building construction industry.

(10)“Newly built unsold housing units (including the allotted land)” shall mean houses (including the allotted land) built less than five years ago and maintaining the first registration of building ownership.

(11) “Idle industrial land” shall mean land listed on the Announced Inventory of Idle Land in Industrial Parks under the Jurisdiction of the Ministry of Economic Affairs as inquired by financial institutions of the Joint Credit Information Center (“JCIC”).

(12)“Borrowers” shall mean natural persons or corporations.

(Restrictions on housing loans extended to corporations)

4. Housing loans extended by a financial institution to a corporation shall be subject to the following restrictions:

(1) No grace period.

(2) The maximum loan amount may not exceed 30 percent of the appraised value or purchase price of the house (including the allotted land), whichever is lower.

(3) The loan amount in the preceding Subparagraph may not be increased by reason of home renovation, working funds, or other purposes.

[Related Circulars]

(Restrictions on housing loans extended to natural persons)

5. Housing loans extended by a financial institution to natural persons shall be subject to the following provisions:

(1)High-value housing loans: The restrictions set forth in the Subparagraphs of the preceding Article shall apply.

(2)Home loans: The financial institution shall inquire the JCIC about the applicant’s current status of housing loan history to determine whether the applicant has any outstanding secured loan backed by a house (including the allotted land) as collateral and of which the purpose is classified as “1” (for real estate purchases), and verify whether the applicant has any houses registered under his/her name in the “Nationwide Property Tax Master Registry”. The new home loan shall be subject to the following restrictions:

a. For a natural person who already has a house/houses but no housing loan: Subparagraph 1 of the preceding Article shall apply.

b. For a natural person who already has one housing loan: Subparagraph 1 and Subparagraph 3 of the preceding Article shall apply , and the maximum loan amount may not exceed 50 percent of the appraised value or purchase price of the house (including the allotted land), whichever is lower.

c. For a natural person who already has two housing loans or more: Subparagraphs of the preceding Article shall apply.

[Related Circulars]

(Restrictions on land loans)

6. Land loans extended by a financial institution shall be subject to the following restrictions:

(1)The borrower shall submit a substantive development plan for the land purchased and undertake that construction will commence within a specific time frame.

(2)The maximum loan amount may not exceed 50 percent of the acquisition cost or appraised value of the land, whichever is lower. 10 percent of the loan may not be disbursed until construction begins.

(3)The loan amount in the preceding Subparagraph may not be increased by reason of working funds or other purposes.

(Restrictions on unsold housing unit loans)

7. The maximum amount of unsold housing unit loans extended by financial institutions may not exceed 30 percent of the appraised value of the housing unit.

The loan amount in the preceding Paragraph may not be increased by reason of working funds or other purposes.

(Restrictions on idle industrial land mortgage loans)

8. For idle industrial land mortgage loans extended by financial institutions, the maximum loan amount may not exceed 40 percent of the appraised value of the land.

The loan amount in the preceding Paragraph may not be increased by reason of working funds or other purposes.

The provisions of the two preceding Paragraphs do not apply if an idle industrial land mortgage loan has any of the following conditions:

(1)The construction and/or development of the mortgaged land has begun.

(2)The borrower has submitted a substantive plan for construction and/or development for the mortgaged land and has undertaken that construction and/or development will begin within one year.

(Exceptions)

9. These Regulations do not apply to mortgage loans extended by financial institutions for reconstruction projects developed pursuant to the Urban Renewal Act, the Statute for Expediting Reconstruction of Urban Unsafe and Old Buildings, or in accordance with government policies.

(Appraisal)

10. A financial institution shall conduct the appraisal for mortgage loans in accordance with its internal lending rules and provisions set forth by the competent authority.

When a financial institution processes an application for the transfer or term extension of a loan stated in the preceding Paragraph, the loan amount may not be increased through reappraisal.

(Reporting and risk management)

11. A financial institution shall file reports on its mortgage loans periodically in the format set up by the Central Bank of the Republic of China (Taiwan).

A financial institution shall set up internal risk controls, operating procedures, and other necessary internal rules for conducting mortgage loan businesses. If the lending criteria under the financial institution’s internal rules are stricter than the Regulations, the internal rules shall prevail.

(Loan cases approved prior to implementation)

12. For mortgage loans that have been processed but not yet disbursed before the amendment to these Regulations takes effect on September 20, 2024, the provisions prevailing at the time the loan application is processed shall apply.