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Victims of Mortgage Require to Establish Control over the Activities of Moneylenders

The Union of the victims of  mortgage requires the government to establish control over the activities of private moneylenders at the legislative level.

According to them, the law enforcement agencies should be interested in the activity of private moneylenders and many cases should be investigated.

In parallel with these statements, human rights organizations and victims demand tightening of the legislation, but the government still does not solve the problem either at the government or the legislative level.

“Georgian Dream” has been in power for 2 years, but there is no vision about how to solve the problem of mortgage debtors whose property is increasingly transferred to the ownership of banks, microfinance institutions, and private moneylenders. Moreover, in private conversations with journalists, government officials admit that they see no way out of this situation – neither moneylenders, nor  MFIs and  even banks violate any laws, citizens taking  loans do it voluntarily, without any coercion,  in most cases they are aware of what kinds of problems they can face after taking loans. Accordingly, the state cannot show any claim to them.

According to the non-governmental organization “Banks and Society”, private moneylenders account for 65% of victims of mortgage debt, MFOs- 18% , and 16% – the commercial banzks.

The victims have already created their alliance, in their opinion, the main problem is  the uncontrolled activity of lenders and weak legislation.

“Standards of judgments introduced  under the previous government are still in force, and they should definitely be amended. So far everything is going on in the same mode that was under the previous government. One of the deputies tried to initiate a law imposing a 6-month moratorium on the execution of court decisions relating to the debt on the mortgage. However, the law has not been passed, and nothing has changed. In our opinion, the state should take over the debts and give us a chance to pay them, “- say the debtors.

According to the Public Registry, currently 170 000 mortgage loans are registered, of which half are moneylenders.

“Banks give customers more opportunity, as they are not interested in the property, it is more profitablefor them to get their interest. But private moneylenders, on the contrary, seize  the property immediately as soon as the opportunity arises. And in this respect there is no state regulation, “- said the head of the NGO” Society and Banks” George Kepuladze.

Another problem is that commercial banks have tightened lending rules in recent years, however, various MFOs and private moneylenders still give out loans without any problems.

For example, journalists of one of the broadcasters conducted a little experiment, and received a loan ofUSD 20 000 at 2.5% per month in just 2 minutes.

“Some regulations have been recently introduced, particularly, notarial  registration became mandatory when getting a mortgage as well as a restriction on the maximum percentage was imposed. However, these changes have not changed the situation, even the reduced interest rates are still very high, and it is practically impossible to pay them, “- Director  of the  Social Programs and Development Center Sophio Beroshvili says.