“It turns out that we are hostages of the situation” – customers of some banks do not receive support for mortgage loans. How do the authorities justify this?

Recently, many mortgage borrowers received support payments for the increased interest payments the government decided to pay out, but not all who qualified received the support payments.

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This can be concluded from the letter that LA.LV received from Ruslan.

He writes: “I am a mortgage loan client of ABLV bank in liquidation. When I was due to receive support for the increased interest payments that were agreed to be made at the national level, I did not receive it. It turns out that clients of a bank in liquidation by ABLV are denied this, because the bank is in the process of liquidation, however, the interest rate is not reduced and is charged according to the regulations.

It turns out that AB.LV banks [Red.- visticamāk, tādā pašā situācijā ir PNB BANK klienti] customers are hostage to the situation. What to do and where to turn in this matter?”

First, LA.LV sought an answer from the State Revenue Service (SRS). We learned that for the 1st quarter, 111,644 compensation payments were made for the total amount of 20,577,623.15 euros.

The SRS also states: “The SRS receives all the information (persons to pay and the corresponding amounts) necessary for the payment of mortgage loan interest compensation from the credit institutions that have issued these loans, and the payment is made automatically. Therefore, please address all questions to the credit institution that issued the loan.”

Since the liquidation process of AB.LV is monitored by the Bank of Latvia, we asked them about the solution to this situation.

Once again, we were encouraged to look elsewhere for an answer, perhaps the Ministry of Finance (FM) could provide it.

We received a relatively broad explanation from the Ministry of Finance regarding the granting of support. Read it further!

“According to the tenth part of Article 8.4 (Mortgage Borrower Protection Fee) of the Consumer Rights Protection Law, the eligible mortgage borrower for the application of this Article is the consumer with whom the fee payer has concluded a mortgage loan agreement, if both of the following conditions are met:

1) the mortgage loan agreement is concluded until October 31, 2023;
2) the balance of the mortgage loan does not exceed 250,000 euros.

Therefore, the legislator has created a model that only the eligible mortgage borrower receives the support specified in the mentioned article of the law and he qualifies to receive support if the aforementioned conditions are met, where one of the conditions is a contract with the toll payer.

If a creditor (for example, a credit institution whose credit institution license (permit) has been revoked and which does not meet the definition of a credit institution in the sense of Article 1, Part Two, Clause 1 of the Law on Credit Institutions) does not qualify for the definition of a mortgage borrower protection fee payer, then it is not, according to the definition set out in the law the payer of said fee.

In accordance with the regulation contained in the law, the credit institution pays a fee and provides information to the SRS about the beneficiaries of support – the eligible mortgage borrowers. Based on the mentioned information, SRS reimburses support from the paid mortgage borrower protection fee to the customers of the mortgage borrower protection fee payer – the eligible mortgage borrowers.

The Ministry of Finance does not have information on the number of natural persons whose loans have been taken from credit institutions in liquidation and the persons continue to pay interest payments on mortgage loans to the mentioned borrowers, possibly such information can be provided by the Bank of Latvia, which supervises credit institutions in liquidation.

In addition, we draw attention to the fact that if amendments are made to Article 8.4 of the Law on the Protection of Consumer Rights and the Saeima supports the wider application of the Mortgage Borrower Protection Fee, then a wider range of borrowers could also receive support payments.”

If you need help finding answers to unclear questions, feel free to write to [email protected]! I will try to help as much as possible.

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