The number of giving-in-payment notifications reached 6,400 at the end of last year, and the value of loan obligations compensated through this measure amounted to about EUR 400-421 million.

The giving-in-payment law allows mortgage debtors who can no longer pay back their loans to give in the mortgaged assets to the banks and have the debt canceled.

After the law became effective, in May 2016, the number of giving in payment notifications reached about 1,000 per month, but fell to 100-150 per month towards the end of the year, said yesterday Florin Neagu, deputy director of the Financial Stability Department within Romania’s National Bank (BNR), reports local Agerpres. However, this could only be a waiting period, and the notifications could increase again, Neagu added.

The BNR data failed to confirm the initial estimates, according to which hundreds of thousands of cases would resort to the giving-in-payment procedure. In total, about 300,000 debtors with total loans of EUR 9.3-9.5 billion are eligible for the giving-in-payment law.

“This is the extreme case. Comparing to what happens in the market, we’ve found that we have notifications amounting to 2% of the maximum level,” the BNR representative said.

Neagu explained that one of the reasons for the decrease in the giving-in-payment notifications is related to the Constitutional Court’s decision on the law. The court decided that the drop in the real estate assets’ value isn’t enough for debtors to ask the bank to take the mortgaged houses and close their loans, that the procedure is not automatic, and not everybody can give in their home.

A judge needs to decide who qualifies for this procedure and who doesn’t by determining if a debtor can pay back his loan or not. The judges need to draw the distinction between those who can’t and those who don’t want to pay.

The giving-in-payment law was approved by the Parliament in May 2016.

editor@romania-insider.com