Brazil’s Prominent Home Lender Placing Further Quality Control Procedures
Caixa Econômica Federal – the Brazilian bank with over an 70 percent share of the national mortgage market – looks set to commence a stricter approach to the granting of finance. One of the main emerging issues has been the growth of housing of bad quality and sub-standard technical adherence – to which the institution has been using as mortgage security. The concern is that such housing will remain in bad quality and, particularly when constructed in scale, could turn to form collectives of favela communities.
From July, if the problems remain, the bank will have the option of adopting different rules for specific regions – for example, not allowing the granting of home loans for properties that have certain defects or incomplete infrastructure / urbanization facilities in place.
Another requirement will be a technical / descriptive statement by the local municipality which will need to be co-signed by a bank-approved technical supervisor. This will need to be done even if the process is normally waived by the local municipality and will also focus on essentials such as quality, the local environment and safety.
The Caixa Econômica Federal will shortly be undertaking an impact analysis of the measures in terms of their real time application, flexibility and whether prior amendments will need to be made.
