Regulations Governing the Extension of Mortgage Loans by Financial Institutions

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Title：

Regulations Governing the Extension of Mortgage Loans by Financial Institutions

Inactive Regulations

Announced Date： June 24, 2010

Amended Date： Amended on September 23, 2021;effective from September 24, 2021.

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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 contains 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) “Specific areas” shall include Taipei City, New Taipei City, Taoyuan City, Taichung City, Tainan City, Kaohsiung City, Hsinchu County, and Hsinchu City.

(13)“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 40 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.

(Restrictions on housing loans extended to natural persons)

5. When a financial institution processes the application of a natural person for a housing loan, it shall inquire of 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 the new housing loan shall be subject to the following restrictions:

(1) High-value housing loans:

a. No grace period.

b. For a natural person who has no housing loan or already has two or fewer housing loans, the maximum loan amount may not exceed 55 percent of the appraised value or purchase price of the house (including the allotted land), whichever is lower; for a natural person who already has three or more housing loans, the maximum loan amount may not exceed 40 percent of the appraised value or purchase price of the house (including the allotted land), whichever is lower.

c. The loan amount in the preceding Item may not be increased by reason of home renovation, working funds, or other purposes.

(2) Home loans:

a. For a natural person who already has one housing loan:Item a of the preceding Subparagraph shall apply to a home loan for purchaing a house located in a specific area.

b. For a natural person who already has two housing loans: Items a and c of the preceding Subparagraph shall apply, and the maximum loan amount may not exceed 55 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 three or more housing loans: Items a and c of the preceding Subparagraph 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.

(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.

(2) The maximum loan amount may not exceed 60 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.

(Restriction on unsold housing unit loans)

7. The maximum amount of unsold housing unit loans extended by financial institutions may not exceed 50 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 50 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 institutionsfor 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 24, 2021, the provisions prevailing at the time the loan application is processed shall apply.