The Bankers Association of the Republic of China (銀行公會) said yesterday it was still studying the request of the legislature and the financial regulator to extend the grace period for mortgage borrowers to start paying back their principal after three years.
The association’s lending business committee and more than 20 domestic banks that offer mortgages met yesterday to discuss the request.
“The committee is still studying the proposal and gathering opinions from the banks,” Elton Li (李蔭棠), chief of the association’s consulting services center, said by telephone.
The committee will present its findings to the association’s board, which will meet on Tuesday, Li said, adding that he wasn’t sure the proposal would be on the board’s agenda.
The legislature approved a resolution on Thursday asking the Financial Supervisory Commission (FSC) to recommend banks grant mortgage borrowers a grace period of three years on payment of their loan principal. That means, borrowers will only have to pay the monthly interest payments on their mortgages during this period.
FSC Chairman Gordon Chen (陳樹) told the legislature on Thursday that the commission would initiate talks with domestic banks and hopefully reach a final decision “within two weeks.”
DEFAULT RISK
Chu Yu-feng (朱玉峰), senior vice president of Land Bank of Taiwan (土地銀行) and general manager of the bank’s consumer banking department, yesterday said that most banks already have a mechanism in place for borrowers to renegotiate loan terms.
“It is also in the interest of banks to negotiate such a grace period because of fears that these mortgages may turn into nonperforming loans,” Chu said, adding that the bank’s home mortgage loans total NT$600 billion.
However, he expressed concern over a wide application of the policy, saying borrowers who cannot afford to repay their loans were likely to default even with a longer grace period.
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