Duties in Charge of Banks

Since July the 25th, 2014 amendments on Federal law “On Mortgage (mortgage securities)” came into effect, which specify the insurance of liability under a contract of debitor –the physical entity for failure to implement obligations towards the creditor on repayment of loan in full amount and insurance of the financial risk of the creditor in the result of originated losses, which were caused by the impossibility of satisfaction of objectives guaranteed by the mortgage in its full volume for the insufficiency of the value of the pledged property. It is worth mentioning that the new types of insurance are voluntary since those assume rights but obligations. In general, nothing has changed for debitors – the insurance of liability of debitor existed earlier as well, but deals have a rather individual character. Debitors consider this type of insurance as an additional expense but not a real safeguard of their financial interests. Banks also do refrain from using their rights on insuring such risks since any insurance is a rise in price of a loan. In theory the insurance reduces the risks of banks though it could hardly foster lowering of rate, since the mortgage loan margin is not so big and the banks cannot work with losses.