Resolution CMN No. 386 - Regulation of Real Estate Credit Operations - Definition of Institutions in the Housing Financial System

RESOLUTION NO. 000386

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the NATIONAL MONETARY COUNCIL, in a session held on this date, having regard to the provisions of Article 4, items VI and XXII, of the aforementioned Law,

HAS DECIDED:

I - Financial institutions not part of the Housing Financial System are prohibited from carrying out credit operations linked in any way to:

a) acquisition of land that is not intended for own use;

b) production of developments or housing units, unless it involves the pass-through of resources in cases where the institution is acting as a Financial Agent of the National Housing Bank.

II - The following institutions constitute the Housing Financial System, for the purposes of this Resolution:

a) National Housing Bank;

b) Federal Savings Bank;

c) State Savings Banks;

d) Real Estate Credit Societies;

e) Savings and Loan Associations.

III - Regardless of the source of funds, institutions belonging to the Housing Financial System, in their credit operations aimed at the production, commercialization, or acquisition of housing, shall be governed by the norms of the aforementioned System.

IV - Credit operations conducted by any financial institution and linked to the realization of real estate developments without residential purposes shall comply with the following conditions:

a) the value of the operation, while a loan for production, will be limited to a maximum equivalent to the direct costs of realizing the development, excluding portions attributable to the cost of the land;

b) the value of the operation regarding financing for the commercialization of the development or each of its units will be limited to a maximum equivalent to 70% (seventy percent) of the lower of the appraisal or sale values;

c) financing for the commercialization of the development or each of its units will be limited to a maximum of 10 (ten) years.

V - In the credit operations referred to in items III and IV, the following shall be observed:

a) they must have, as mandatory guarantee, a first-degree mortgage on the property subject to the operation, with a term limited to the duration of the construction works, plus up to 6 (six) months;

b) the titles or rights received by the mortgagor debtor resulting from the promise of sale or alienation in any form of the development or each of its units must be deposited with the secured lending financial institution, which will use the collected resources to amortize the debt of the mortgagor debtor until its full settlement, releasing, from then on, the remaining titles or rights representing the portion of the price not financed;

c) financial institutions in general may not carry out discount or loan operations guaranteed by promissory notes or any other titles linked or related to the promise of sale or alienation in any form of an unfinished, individualized, and delivered-to-buyers property, while the mortgage debt referred to in the previous clause remains outstanding.

VI - The Central Bank and the National Housing Bank, within their respective areas of activity, will supervise compliance with this Resolution.

Brasília-DF, July 21, 1976

Paulo H. Pereira Lira
President