Regulatory Alerts2003-02-07
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Residential mortgages in negative equity
The Hong Kong Monetary Authority issued this circular to address the rising number and value of residential mortgage loans in negative equity due to falling property prices. The regulator encourages authorized institutions to remain sympathetic toward homeowners in financial difficulties and to assist with loan restructuring or refinancing schemes. These measures aim to ameliorate repayment burdens and achieve mutually acceptable solutions that benefit both customers and institutions.
Our Ref: cc: Circulars 07 Feb 2003 Residential mortgages in negative equity B9/25C B1/15C 7 February 2003 The Chief Executive All authorized institutions Dear Sir / Madam, Residential mortgages in negative equity Survey results for the position as at end-December 2002 indicate that the number and value of authorized institutions' residential mortgage loans in negative equity continued to increase during the fourth quarter as a result of the fall in property prices. We appreciate that many institutions have set up call centres to assist negative equity homeowners to restructure their loans with a view to ameliorating their repayment burden. Some institutions have also offered schemes to allow refinancing of such loans up to 140% of the current market value of the property at more favourable rates. In the light of the rising number of negative equity loans and the continuing weak economic condition, we would encourage institutions to continue to be sympathetic towards negative equity homeowners in financial difficulties seeking loan restructuring. A mutually acceptable solution would be in the best interests of both the customer and the institution. Yours faithfully, D T R Carse Deputy Chief Executive The Chairman, the Hong Kong Association of Banks The Chairman, the DTC Association
Last revision date : 01 August 2011
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