LE PETIT JOURNAL – THURSDAY, 29 SEPTEMBER 2016 THE “LEGAL” COLUMN Bought to you by

CONSUMER PROTECTION: NEW RULES FOR REAL ESTATE LOANS In order to protect consumers intending to conclude a loan agreement for purchasing property, the Romanian Government recently passed Emergency Ordinance no. 52/2016 (published in Official Journal no. 727 of 20 September 2016 and which will become effective on 30 September). The Ordinance introduces rules regarding the compulsory content of loan agreements and the forms of advertising creditors can use in order to reassure consumers when concluding a loan agreement. Below you can find a summary relating to these new provisions, as well as to the calculation of default interest corresponding to loan agreements. PUBLICATION OF REAL ESTATE LOAN OFFERS Any form of advertising regarding real estate loans must comprise standard information, such as: the creditor’s identity and registered office, if the credit will be guaranteed or not by a mortgage upon the property subject to credit, the interest rate (fixed or variable), the total value of the loan, the annual percentage rate, contract duration, the value of monthly payments, the total value to be paid by the consumer, the number of payments, as well as a warning regarding the fact that potential exchange rate fluctuations could affect the final amount to be paid. Such information, except for that relating to the creditor and the nature of the loan, must be accompanied by a representative example meant to enlighten consumers. REAL ESTATE LOAN CONVERSION Ordinance no. 52/2016 provides that, from now on, creditors will have to insert into real estate loan agreements concluded in foreign currencies a clause allowing consumers to convert the contract currency into an alternative currency, at any time. In order to benefit from this facility, consumers must submit a written application.

Creditors cannot impose any restrictions to consumers and must present to them other banking products, available when the conversion application is submitted. A NEW INTEREST CALCULATION METHOD When they fail to make a payment, consumers owe default interest. Such interest is applied by certain creditors to the credit balance and not to the unpaid amount (or to the unpaid amount + the monthly interest of the loan). From now on, default interest will no longer be applied to the credit balance or to the total amount to be paid by consumers, further the amendment of Ordinance no. 50/2010 on credit agreements for consumers by Ordinance no. 52/2016. Furthermore, the amount of default interest will no longer exceed the principal of the unpaid amount. Moreover, further to the entry into force of Ordinance no. 52/2016, creditors will no longer charge interest or default interest after the beginning of foreclosure.

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