By Accommodation Times News Services
By Sanjay Chaturvedi
Most of the Housing Finance Companies are behaving like SAHUKARs and do not have human face.
With one sided agreement, blank undated cheques, promissory notes from borrowers and guarantors and hefty processing fees, getting housing finance is almost impossible to get. Under valuation of properties while giving loans and more sharper teeth with Securitization Act for foreclosure norms, banks are rejecting 90% of loan application since the loan size fall short according to their credit policies and earning handsome revenues by way of processing fees.
With interest rates mounting up hill, the exposure to housing finance process adopted by many banks and financial institutions giving nightmares to the home loan borrowers. Carteling in the process of disposing off NPA properties and non-transparent interest rate calculations will lead to nothing but unholy practices and a total collapse of home loan market in India. Transferring NPAs to Assets Restructuring companies, which are promoted by these banks, to take away the borrower’s initial contributions is the normal practice.
National Housing Bank, apex body to regulate the housing finance, is sleeping over issues pertaining to the industry. It seems, the authority is greatly in favor of housing finance companies rather then consumers of home loans.
Busy in devising mortgage instruments, which are not a common knowledge, NHB’s ventures into more institutionalization of home loans through a great influence of home loan financiers is working out to be a capitalistic approach towards the sector. While making the process simpler it has created a complex process for up keeping the good books for such financiers.
Institutions and banks gets funds for housing finance for economical weaker section of society and budget homes at 4% from Germany, 2 % from Japan and around 6% from IMF through UN Habitat Council. In return, housing finance companies do not want to share the cheap funds with the most deserving budget home seeker.
SBI have recently reduced the interest rates to 9.75% and RBI’s intervention have forced home loan financiers to reduce the interest rates but large players such as ICICI Bank is still waiting to reduce it and have kept the interest rates as high as 16.5%. Certainly Assets and Liability mismatch is a great problem in housing finance sector since funds are available for short term through FDs and they have to remain committed for longer periods but question remains that when other banks could do it why not largest players of the industry? Funding home loan for a person who is earning Rs.9000/- a month is not at all entertained since affordable EMI could be just Rs.3000 to Rs.4000/-. A loan of Rs.2 lakh to Rs.4 lakh is the eligibility of such income, so where does homes of such selling prices are constructed.
Fact remains that according to the income profile of the borrower, housing finance companies are slapping interest on them. If you can prove to these financiers that you don’t need a loan, then only you are eligible for housing finance. The process of housing finance and mind boggling calculations of EMIs will certainly killing housing finance market. When nationalized banks remain optimistic, private players are having insufficient funds or WILL to fund budget homes “ Housing for ALL” remain distance dream if only we talk about affordability stops at Rs.5 lakh annual income and below.