MORTGAGE LOANS – did they turn the corner?

It is easily understandable that, despite problems of a cyclical and non-cyclical nature that usually
accompany construction and mortgage loans, their financing will continue incessantly. At this
point, the remaining challenge for banks is to ensure and obtain an efficient and balanced
combination between a manageable exposure to them and selecting quality clients.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common
sense, paid for in full, and managed with reasonable care, it is about the safest investment in
the world. Franklin D. Roosevelt!” It is for such interesting statement of the 32
nd
President of
the United States of America, Mr. Franklin D. oose!elt, that an"one could easil" understand
the e#clusi!it" $hich characteri%es the real estate, construction sector and its res&ecti!e
financing. 'echnicall", the a&&roach of (anks and other financial institutions to$ards real
estate, construction ) housing and financial &roducts, the" model and design, differ *uite
su(stantiall" from all the rest of &roducts and ser!ices the" offer in the market. 'his is sim&l"
e#&lained (" the s&ecial role and &lace, the +home” &la"s and takes, as one of the most
im&ortant in!estments throughout e!er"one,s life. -n the other hand, the construction sector
has, (" contrast to all other sectors of national econom", the a(ilit" to create a t"&ical
interlinking net, (et$een industries and man" other sectors of the econom", (e the" in the
manufacturing, or ser!ice sector, along $ith em&lo"ing a relati!el" high num(er of la(or
forces.
.onstruction and housing remain *uite interesting for (ank financing, for man" reasons, like/
no one could &ro!ide that sort of collateral the" do0 mortgage loan installment $ould (e
reasona(l" among the first o(ligations an"one $ould &a" regularl"0 no other assets are not
assessed or re!alued, o!er time, as real estate and assets do0 the a(solute ad!antage these
assets ha!e, in relation to other t"&es of assets, to ser!e as underl"ing assets for designing and
creating structured financial &roducts, $hich are $idel" traded in glo(al financial and
securities markets. 1ut the relati!el" high e#&osure to the construction sector and mortgage
loans is usuall" associated $ith certain risks, &articularl" in the frame of financial and
economic crises, and also $hen the econom" enters its contracting and do$ns$ing c"cle.
Moreo!er, the long2lasting international e#&erience has sho$n that a(normal e#&osure to real
estate, construction sector and mortgage loans constitutes one of three elements that t"&icall"
and classicall" accom&an" a financial crisis, along $ith the e#cessi!e use of financial
le!erage and $eak risk management ) anal"sis.
3o$ it is cr"stal clear the $eight and effect, real estate, construction and mortgage loans
&ortfolio, had and still continues to e#ert, on non2&erforming loans of the Al(anian (anking
s"stem, as $ell as the actual situation and the near future of this sector, $ithin the national
econom". Surel", the cost $eathered (" (anks in this regard $as and is not modest, (ut
ne!ertheless, it ser!ed to gain a !alua(le e#&erience, to carr" on $ith construction and
mortgage financing, (ut through a more &rudent and (etter *ualit" management &rocess. It is
for this e#&erience that is hel&ing (anks no$ to resha&e their a&&roach to$ards construction
and mortgage loans, $hich in turn, is resulting in some interesting and attracti!e offers for
customers. 'he" are *uickl" ada&ting to the ne$ trends of citi%ens, lifest"le and market
re*uirements, (" &a"ing ma#imum attention, of course, to com&l" $ith 4 .s of lending
&rocess, at the fullest &ossi(le. It is easil" understanda(le that, des&ite &ro(lems of a c"clical
and non2c"clical nature, that usuall" accom&an" construction and mortgage loans, their
financing $ill continue incessantl". At this &oint the remaining challenge for (anks is to
ensure and o(tain an efficient and (alanced com(ination (et$een a managea(le e#&osure to
them and selecting *ualit" clients. 'his is so, (ecause the loan *ualit", $hich is
fundamentall" (ased u&on the (orro$er,s credit$orthiness, remains the cornerstone for a
*ualit" and &rofita(le loan &ortfolio5