- Today, a lot of talk about insurance in the mortgage. Vladimir Mikhailovich, please tell me why there is a need for insurance for mortgage lending?

- The matter risks. For banks involved in mortgages, it is important to allocate risks between them and the insurance company. Today the three banks are insured risk: the risk of loss and damage to property, the risk of loss of ownership of the apartment by the court, the risk of death or incapacity (disability). In the first place in importance I would put insurance risk of damage or loss of property. In mortgage lending is due to mortgage apartments, houses, land, banks can take on a number of other risks and give credit to the big time. In the case of a pledge that something will happen, for example, collapse, explosion or fire, in other words, there will be a partial or complete damage to the object of pledge, the borrower will be obliged to return the loan, despite the fact that an apartment or house anymore. Its costs in this case, grow up at times. Under the current law property insurance in favor of the bank provided.

- What happens if the property still was lost?

- Do you remember a case where the result of redevelopment of apartment in Moscow, an explosion occurred in a building and crashed down a staircase? If it was flat, planted on the mortgage, the insurance company paid to the debt balance to the bank, thus paying off the loan. Thus, it turns out that the borrower does not have the bank loan paid back through insurance.

- And what about the victim flat?

- In this case, the Moscow government will provide residents of the affected entrance new housing.

- Fortunately, the apartment we did not explode so often. I think that the challenge to the sales transaction - it is more common case of fraud in the real estate market, when the "accident" are either deluded relatives, or "do not know what they do" the former owners. How insurance protects the borrower against the risk of loss of ownership of an apartment?

- Yes, it is a very alarming situation and the danger that the previous owner to challenge the transaction in court, is sufficiently high. The problem is compounded by the fact that in Russia's legislation does not contain a clear legal status approved by a bona fide purchaser. It is possible that after a certain time after the conclusion of the contract of sale of housing this deal will challenge the previous owner, or even on this deal, and the previous one, and the court recognizes the entire chain invalid. Thus, we find that the borrower after the court decision will cease to be the owner, that is to lose the apartment. That is why we require to insure against the risk of a flat loss of property rights (the so-called title insurance). This means that if a court decision to terminate the borrower's property rights to housing or limiting the ownership of the apartment, the insurance company will pay the full cost of bank credit.

- Many banks always require life insurance. Why is this done and that it gives the borrower?

- This is the third, a very serious block of insurance. In Russia's mortgage practice, there have been instances when borrowers have died. For example, in 2003, riding on a sledge on January 1, lost to women borrowers. Loss occurred. Her husband left $ 57 thousand debt on credit and the child is five years. What would have happened if there were no insurance? The family must repay the debt. At delay in the repayment of the loan the bank will give a claim to the court for the recovery of the loan through foreclosure of the mortgage, apartment for sale at auction, and the tenants must be evicted. But what happens in our case the presence of insurance? Insurers, after obtaining all the documents pay the full amount of the debt to the bank, and the family lives in his own apartment, because the insurance company in our contract has no recourse. A similar case occurred when the borrowing was killed in his apartment. And in this case, the insurance company has made all payments to the bank.

- And if the borrower becomes disabled, for example, had an accident or received some serious injury?

- We now work there and such a case. Arrogated to Borrower Group I disability, ie he can not work and, therefore, is unable to repay the debt. Foreclose on such loans more difficult. Nevertheless, the insurance company had submitted all the documents, and it is ready to pay the debt. We coordinate the order of repayments. After the payment of insurance the borrower is under no obligation to the bank, the apartment remains in his property.

- Vladimir, why these three risks identified in the major banks?

- The fact that under the current legislation could create exactly the protection of these risks. And we created them. But in the world practice the practice of insurance and other risks. In each country, the insurance company has your status situation. For example, in Germany, the insurers have the right to issue credit, as we have in Russia, the insurance companies are forbidden to do. Here are prohibited, and all. This does not mean that it is right or wrong. Where insurance companies are allowed to issue credit and loans, they can easily share with banks and the risks. Thus, it turns out that if the bank will only loan, the interest thereon will be alone, but if by liability insurance - something completely different. It is practiced in many countries.

- But, let's say, in the United States in obtaining a mortgage loan not being asked to insure their lives.

- Yes, do not ask, but they have insured there is absolutely everything and absolutely everything. We also such things happen. And what is happening in Russia in case of death of the borrower? According to our law of his relatives and heirs will be very difficult to evict, because they can not pay the bills. Or you can take a man who lost his capacity for work, as with him to collect a debt? Some have decided that the title insurance is unnecessary. In principle, we are ready to accept it. But as we investors are foreign companies and banks, they consider the situation in our country is not very transparent and clear on this issue. Our investors are looking at the problem from the viewpoint of international practices and experience. Under normal circumstances, be the case: a person has a document issued by his public services, which says that the housing all in order. This should be a kind of confirmation that if a person legally bought an apartment, it had not taken away. Only such a system works. In many countries, title insurance - is the norm. And in America, and around the world use registration or transaction, or property rights. Again, the registration rights around the world is that if the state gives the paper, it is responsible for it and then compensate for the costs: if somewhere on the court was improperly recorded the transaction, the state will pay compensation, but I, as owner, always remain bona fide purchasers. In this case we can abandon the title. We also now a mixed system - registration and transactions, and property rights. Therefore, we believe that in our country without a solid legal base title insurance need not so much a bank as the borrower himself.

- I know that in many foreign countries in the insurance contract include the risk of losing their jobs. How we have worked through this kind of risk?

- Today, for us the risk is considered to be exotic, and we do not include it in the contract. But in some cases it is possible. In fact, the risk we take: we perform underwriting and discover how an expert is valuable to us and the market, trying to predict. We are doing an analysis of the value of a specialist, calculate how quickly he will find work, how much will it cost now, a year after five years. And only then approve the loan.

- What additional requirements you are bringing to the borrower?

- In addition to the three above-mentioned risks, we do not include in the contract, only ask that the borrower has provided insurance coverage.

- A little more: what it is and how it is paid off?

- Insurance coverage - is a separate payment. Today in the world is such a thing as eskrow-account, that is, a person transfers the money to a specific account and the bank then he isolates the interest of the insurance company. Eskrow-account is used to the fact that to the borrower the money is transferred once, and the bank then they have already distributed as needed. But if the money got to score, then pick them up he could not, for it must be serious grounds. We have a no. All that the borrower has remitted to the account or written off in the current month, or the money can be removed. Therefore, we ask every year to pay the premium. Now we are trying to resolve the issue with the Central Bank of something like eskrow-bills to split the payment for 12 months, but there is no such possibility either organizationally or technically. For example, you need to between the bank and insurance company there was at least the software, because the enormous amount of information processed by hand is impossible. We now have an agreement with insurance companies that our borrowers pay for insurance once a year.

- Could you tell more about property insurance, as is the procedure?

- In order to insure the property, must be its owner. Our borrower is not the owner, he only found an apartment that will buy. We have decided this issue as follows: The client wrote the statement and completes the questionnaire, the insurance company sent a set of documents. After that, the insurance company conducts its underwriting, ie, checks the history of the apartment and decides. Then he gives a conclusion and determine the tariff rate on this transaction. But there is more consistency between companies, so the borrower signs a combined contract that lay out all the risks. And the prices from this point will not change. The insurance contract is signed and paid for before signing a mortgage loan. And in the insurance contract stated that he enters into force upon signature on the risk of death or disability, and in part of the property - from 00.00 after the date of signing. It means that the contract is signed, but it actually starts to work when the registered ownership of the apartment.

- And if the insurance company refuses to deal?

- It all depends on the policy the insurance company. In one - some claim, the other - the other. We have had such cases, but then we offer the apartment of another insurance company with a mandatory clause that the previous insurance company refused. If the second company fails, we also refuse the client. If insurers are taking a risk, we are working with the apartment further, but at a higher rate. It happens that the insurance company sees the risks, evaluate it and said that the tariff will be higher. This is also a way out. You can, of course, do enough hard selection, but gone are the days when it was possible to pick. The market situation is really difficult, because housing is much less enter the desired volume. Therefore, insurance companies usually just increase the fare, although there are also failures.

- How do you think how a man likely to get secured loans?

- There is no difference whatsoever. If you can afford, then why not. The only thing we have a limitation: if a loan up to $ 100 thousand life insurance is based on questionnaires, and all that above - only after the examination. A difference for the rest there is no risk. It happens that a small apartment to work harder than with a major. Note that we do not practice loans worth more than $ 400 thousand, as it requires a serious security. Even in America, to refinance the loans do not involve the size of more than $ 350 thousand, despite the fact that property prices there are much higher.

- I heard that many businessmen earn on mortgages, how it occurs and how such an investment with a bank loan worth it?

- In order to answer this question, we must clearly understand that this property - it is one of the most profitable way of investing. If you bought an apartment in 1996-1998, when the market had serious fluctuations in the dollar, would have won many times, because at the conclusion of the mortgage contract dollar frozen. In other words, you would now be paid on the loan based on the rate of 6-7 rubles. dollar. Especially fortunate for those who bought the apartment at the time of financial instability - reconstruction, when the money is rapidly devalued. In any case, buying an apartment today, after a year or two you sell it more expensive. For example, not so long ago a client who bought a home mortgage in the last year, fully repaid the loan. We began to understand, and it turned out that the borrower to sell it. They were purchased one-bedroom apartment on Berezhkovskaya for $ 70 thousand, but now he set her up for sale for $ 140 thousand today, real estate prices are growing faster than inflation, so we can safely say that the property - an investment project. For example, a friend of mine bought a few years ago, the apartment mortgage of $ 200 thousand, and now it costs $ 650 thousand turns out that now you run absolutely everything: the inflation in the country, and the dollar exchange rate.

- Vladimir Mikhailovich, analysts argue that it is now an increased demand for commercial real estate. From a practical point of view, perhaps, to give a big credit is much more profitable than several small ones. Would you be interested this direction and whether working with legal entities?

- With entities we do not work, though, as you correctly noticed, indeed, to give a big credit is much more profitable than several small ones. But it is precisely this that is the main risk. If the borrower does not pay on the loan, the bank will lose huge money. What is the portfolio for a mortgage on commercial real estate, say, a $ 5 million? It is about 100 borrowers (individuals) on home mortgages. If one of the hundred does not pay, then it will cover the other, that is, all the risks of mortgage housing leveled. It should be noted that there are banks, which specializes in commercial real estate. If they can not afford to risk so - please. This is a completely different business. Our investors are strictly distinguish between these two directions, and we work only with individuals.

- How relevant today mortgage insurance? Why use it?

- Mortgage insurance is now under development. Its meaning is that if a borrower for any reason be unable to make timely interest and principal payments on debt and the bank to foreclose on the mortgage, which would be insufficient to repay the loan, in this case, the amount would cover the insurance company, so we have talking about the risk of falling property values and reduce the down payment. Here on this issue and fight now, our legislators: how to make in this transaction were no injuries. Developed and another direction on the mortgage - lending transactions at 95-100%. Today, many borrowers who are unable to make an initial contribution, but very much want to live in a new apartment and can pay for it. And we are willing to lend to such a deal, but with higher tariff rates.

- Vladimir Mikhailovich, many worry about the interest rates, which over the years diminished. How do you think, as far as possible refinancing of credit in our country and what is the maximum probability of lower interest rates?

- A few years ago interest rates were 18-20%. But everything changes. People want to take credit, but banks do not want to lose customers, so many banks themselves offer more favorable terms or agree to offer borrowers to refinance loans. The system of refinancing when the borrower asks his bank to lower interest rates and in case of refusal goes to the other, more profitable for the bank he works around the world. Perhaps in this, in 2006 we will have the same thing. We already have a real portfolio of borrowers with a real credit history. And I am confident that 2006 will be the year of real refinancing. This was stated a number of major banks.

- What would you, as a specialist, advised wishing to purchase a home mortgage?

- Take the money - not to give. If you are an expert and confident in yourself and your business, if you tsenites in the labor market, and your products and services in demand, then I would advise to take the money. Today many people to make investments, such as buying expensive cars on credit, technology, but this product two years later devalued by 25-40%. A flat always increasing in price. Having your own property - is an opportunity to build their lives and the incentive to not parting with the property, and get it everywhere, and most importantly - in prices.