The proposed project consists in the acquisition of maximum 20% of the equity of the Romanian American Mortgage Credit company (RAMC) for an amount of up to US$ 1.5 million and a loan of up to €10 million. RAMC will use this financing to on-lend for residential mortgages to individuals for acquiring, upgrading and building residential properties.
The project will increase the supply of mortgage finance in Romania, which is very low by international standards. It will have a demonstration effect promoting best-market practices in terms of customer responsiveness, documentation, consumer protection and corporate governance. RAMC also intends to securitise its mortgage portfolio by issuing mortgage-backed securities and foster the development mortgage-backed securities by acting as a conduit for other issuers. It may also foster wider regional markets by participating in cross border issues of mortgage-backed securities. The company will also promote legislative improvement in what concerns mortgage lending and securitisation of mortgage portfolios.
RAMC, an early stage independent mortgage company set up by the Romanian American Enterprise Fund. The United States Agency for International Development is also providing an US$ 2 million technical assistance package to help support the establishment of RAMC.
Equity: US$ 1.5 million
Loan: €10 million.
Co-financing to be syndicated with other IFIs.
€27.4 million in total (US$ 18 million and €11 million).
RAMC is required to ensure that a property survey is conducted for each loan as part of its due diligence. The survey should include consideration of potential site contamination, use/presence of hazardous materials in construction, risk of flooding, or seismic activity and compliance with the applicable national environmental, health and safety standards and regulation.
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