Regulation on Amendment to the Regulation on Housing Finance Contracts was published in the Official Gazette on 23.09.2022.
With the amendments to the Regulation on Housing Finance Contracts (“Regulation”), obligations have been introduced to reduce the power and information asymmetry between housing finance institutions and consumers and to ensure that consumers act consciously in the contract establishment processes. In this context, the law has defined “ancillary financial products and services”. Also, along with the amendments, especially in the processes related to insurance contracts offered together with housing finance contracts, new information that the financial institution should realize for the consumer has been defined.
Accordingly, with the amendment in Article 6 of the Regulation, a number of additions have been made to the information that housing finance institutions must include in the pre-contractual information form, which includes the conditions of the housing finance contract. With this amendment, it has been decided to include information on,
- A sample payment plan which will be prepared based on the loan amount and duration requested by the consumer and can also be given as an annex to the form; in case of insured and uninsured loan offers, the sample payment plans for both offers, and if the loan installment amounts are equal, the comparative information on the installment amount and total repayment amount instead of the sample payment plan,
- In case of insured and uninsured loan offers, sample payment plans for both offers, if the installment amounts of the loan are equal, comparative information on the installment amount and total repayment amount instead of the payment plan,
- In case of insured and uninsured loan offers, the name and duration of the loan-related insurances and whether they are renewable or not, in the notifications made to consumers.In addition, with the third paragraph added to Article 6 of the Regulation, in order for the housing finance institution to present a housing finance contract that includes credit-related insurance to the consumer, it has been made obligatory for the housing finance institution to prepare the Housing finance Preference Form in Annex-5 of the Regulation together with the pre-contractual information form in at least fourteen-point size, including the
consumer’s preference and approval regarding the insurance, and to provide a copy of it to the consumer on paper or via a permanent data storage device.
With the amendments in Article 10 of the Regulation, which has been amended as “Insurance, ancillary financial products and services”, it was regulated that,
- Credit-linked insurance may not be taken out without the explicit request of the consumer in writing or through a permanent data storage device. The housing finance institution may offer to the consumer a housing finance contract that includes credit-linked insurance, provided that the housing finance institution may also offer the consumer a contract that does not include credit-linked insurance, and the provisions regarding compulsory earthquake insurance are reserved,
- The insurance policy provided by the consumer from the insurance company of consumer’s choice, compatible with the amount and duration of the loan, with the housing finance institution as the principal beneficiary, must be accepted by the housing finance institution without causing any change in the conditions of the loan offered to the consumer,
- Credit-linked insurance should be compatible with the amount and maturity of the outstanding debt in the sum insurances, in order to guarantee the repayment of the loan debt,
- Credit-related insurance must be compatible with the subject matter of the loan, and
- More than one insurance covering the same collateral may not be taken out in relation to the loan, and insurance exceeding the loan amount is prohibited.
Along with the Regulation Amending the Regulation on Housing Finance Contracts, it was stated that the amendments made in Article 6 of the Regulation will enter into force on 01.01.2023 and the other amendments will enter into force on 01.10.2022.
You may access the regulation via this link.
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Authors: Bilge Derinbay, Mahmut Ramazan Ertaş, Ayşenur Kol