Regulations on Lending with Real Estate Collateral

2.3. Regulations on lending using real estate as collateral

2.3.1. Mortgage loan application

- In case of mortgage registration, guarantee using land use rights or mortgage registration, guarantee using land use rights and assets attached to land, the registration dossier includes:

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+ Application for registration of mortgage, guarantee of land use rights, assets attached to land (03 copies); authorization document in case the applicant is an authorized person.

+ Mortgage contract of land use rights or land use rights and assets attached to land (02 copies), guarantee contract of land use rights or land use rights and assets attached to land (03 copies)

+ Certificate of land use rights or certificate of house ownership and land use rights in case of mortgage or guarantee with land use rights and houses in urban areas.

+ Extract of cadastral map (for places with cadastral map) or cadastral measurement extract (for places without cadastral map) in case the land use right certificate, house ownership certificate and land use right certificate do not show the land plot diagram.

+ Land tax payment documents (in case of land lease by the state)

- In case of mortgage registration or guarantee using assets attached to land, the registration dossier includes:

+ Application for mortgage and guarantee registration (03 copies); authorization document in case the applicant is an authorized person.

+ Certificate of ownership of property attached to land in cases where the law stipulates that the property must be registered for ownership.

2.3.2. Rights and obligations of the parties Rights and obligations of the mortgagor

- The mortgagor during the mortgage period can still use the mortgaged real estate: this is an important and meaningful condition for individuals and organizations mortgaging because they can both conduct activities on the real estate normally as before the mortgage and have capital to carry out activities recorded in the mortgage documents such as borrowing for investment, for business, to repair houses or expand production...

- The mortgagor has the right to receive a loan from the mortgagee according to the loan contract: when the two parties, the mortgagor and the mortgagee, have signed a contract, it means that both parties have the obligation to execute the signed contract, the mortgagee must provide the loan to the mortgagor according to the amount and term stated in the contract. If the mortgagee does not provide the loan to the mortgagor according to the contract, the mortgagor has the right to make a complaint to the competent authorities.

- The mortgagor is not allowed to take any action that destroys or reduces the value of the property. Such destruction not only reduces the value of the property that the mortgagor has mortgaged but also greatly affects the customer's reputation with the mortgage organizations. The mortgagee will find it difficult to accept a second loan from individuals or organizations that destroy the mortgaged property.

- During the mortgage period, the mortgagor is not allowed to buy, sell, exchange, transfer, convert, lease, sublease... the mortgaged real estate without the consent of the mortgagee. This provision is to ensure that the real estate is still owned and used by the mortgagor so that the mortgagee can best execute the contract and avoid risks for the mortgagee because the mortgagor may refuse to accept responsibility for paying the loan principal and interest to the mortgagee.

- The mortgagor must pay the loan and interest on time and in the correct amount as stated in the contract to the mortgagee. This ensures the legitimate interests of the mortgagee and ensures the amount of capital for the mortgagee to conduct business effectively.

- The mortgagor must perform other obligations to the mortgagee if any in the contract.

Rights and obligations of the mortgagee

- The mortgagee has the right to request the mortgagor to hand over the documents and books... related to the ownership and use of the real estate. Those documents are a guarantee to the mortgagee that the customer will repay the debt according to the terms stated in the contract.

- The mortgagee has the right to inspect the real estate, inspect the performance of the mortgagor's obligations such as paying interest, not destroying the mortgaged real estate as well as inspecting other conditions that the two parties have committed to in the contract.

- The mortgagee must transfer capital to the mortgagor in the exact amount and on time as agreed by both parties. This is to ensure the mortgagee's reputation with the mortgagor and to avoid future litigation if the mortgagee does not transfer capital to the mortgagor or does not transfer it on time.

- The mortgagee must return all documents, records... regarding the mortgaged property to the mortgagor after the mortgage contract is liquidated. The mortgagee is not allowed to keep any documents related to that property.

- The mortgagee must perform all other obligations if agreed by both parties in the contract.

2.3.3. Maximum loan amount

The maximum loan amount is determined by banks based on their business situation, however, no bank can lend customers the value of the mortgaged property, which will negatively affect the bank's capital preservation and risk control. Normally, banks now often lend customers 70-80% of the value of the mortgaged property, some banks may lend a higher rate, depending on the policy of each bank.

2.3.4. Time to determine the value of mortgaged real estate

The value of the mortgaged property is determined at the time the mortgagor and the mortgagee sign the contract. This time does not apply when the mortgagee disposes of the mortgaged property to recover the debt because the value of the property fluctuates over time. Therefore, the price at the time the two parties sign the contract may be different from the price of the property when the two parties liquidate the contract. This must be clearly stated in the contract to avoid disputes as well as reduce the benefits for either party.

The valuation of mortgaged real estate can be conducted unilaterally by the mortgagee or can hire an outside valuation or consulting organization, this is discussed and agreed upon by both parties.

3. Real estate valuation experience of some countries in the world

In recent years, although our country is a latecomer in the field of valuation, we have learned knowledge and experience in valuation from some countries in the world. Our country is gradually forming professional organizations, real estate consulting and valuation centers and is gradually asserting its position in the market.

The Ministry of Finance, together with the Ministry of Natural Resources and Environment, has worked together to develop methods and principles for valuation... based on the application of accumulated experience to the current situation in our country.

The State promulgates the Law on Real Estate Business, decrees and regulations on conditions for conducting valuation services, granting valuation practice certificates, and increasingly perfecting the legal framework to ensure the quality of real estate valuation activities.

Every year, provinces and centrally-run cities issue unit prices for land types to serve compensation and site clearance work... and serve as a basis for individuals and organizations to conduct activities of buying, selling, transferring, leasing, and subleasing.

...

Real estate valuation is a field of interest to many countries. The valuation profession has been developed since the 19th century in many countries, so in theory, valuation methods have been developed quite fully and are widely applied. However, in each country, the names of the methods may be different.

Regarding the organization of activities, in countries where real estate valuation services have been developed for a long time, countries have set standards and regulations for the operation of this type of service. These are regulations on training, experience, certification and practice licenses, and professional standards. In many countries, valuation associations and international valuation associations have been established. These associations often provide training and advanced courses on the valuation profession and set professional standards such as valuation practice standards and professional ethics standards. When participating in professional associations, valuers have the opportunity to improve their professional knowledge and receive support during their activities such as sharing information and experience.

In Singapore, the state agency in charge of real estate valuation is the Land Office, which is the agency that performs the state management function of public land, state management of real estate, develops legal documents, regulatory processes, and procedures for real estate valuation. The Land Office has four departments: land sale, land recovery, state land management, and land development cooperation. The valuation office has the function of performing real estate valuation work to collect taxes and fees according to the provisions of law. The valuation office has four departments: Information processing, real estate valuation, valuation of special real estate such as golf courses, football, casinos, valuation by total real estate value. Private valuation organizations operate in the form of limited liability companies on real estate, real estate business. Valuation service consulting companies operate under a practice license issued by the Central Valuation Council. The professional association is the Singapore Institute of Valuers, which has its own charter and operating regulations.

CHAPTER II: CURRENT STATUS OF MORTGAGED REAL ESTATE VALUATION AT DAI TIN COMMERCIAL JOINT STOCK BANK

1. Some general features of Dai Tin Commercial Joint Stock Bank

1.1. General introduction about Dai Tin Commercial Joint Stock Bank

1.1.1. Basic information about Dai Tin Commercial Joint Stock Bank

Vietnamese Name: Dai Tin Commercial Joint Stock Bank

English name: GREAT TRUST JOINT STOCK COMMERCIAL BANK

Abbreviation: TRUST BANK Chairman of the Board of Directors: General Director:

Head office: No. 01 Long Hoa Town - Can Duoc - Long An Tel: (072) 3880 126 – 3886 032

Fax: (072) 3880 447

Website : http://www.trustbank.com.vn Email : info@trustbank.com.vn

Charter capital: 2000 billion

1.1.2. History of formation and development of the Bank

Dai Tin Bank was officially established 18 years ago. Rach Kien Rural Commercial Joint Stock Bank is the first joint stock bank in Long An province.

From an initial capital of only 3.4 billion VND, through many difficulties due to the transition from a centrally planned economy to a market economy under state management according to the government's policy as well as overcoming the credit system crisis in the early 90s of the last century. Thanks to the timely attention and direction of leaders at all levels, sectors inside and outside the province, along with the efforts of the Board of Directors, the Board of Supervisors, the Executive Board and the collective of officers and employees, the company has achieved great success.

The bank has overcome all difficulties and developed steadily until today. Compared to the first day of establishment, the total capital of the bank has reached more than 2,000 billion VND. The sustainability of the bank as well as the quality of the unit's services over the past 18 years have received the trust of customers.

From the above results, Rach Kien Bank is one of the 7 joint stock banks honored to participate in the Rural Finance Fund I (RDF1 Fund) sponsored by the World Bank since 1998 and currently continues to participate in the RDF 2 Fund with the transaction office III of the Investment and Development Bank of Vietnam as the project owner. Currently, the Bank is preparing to continue participating in the RDF 3 Fund.

Vietnam's accession to the World Trade Organization (WTO) a year ago was a great opportunity for Vietnamese enterprises to integrate into the big playing field. However, this is also a great challenge for the business community due to the difference in capital scale, technical expertise, and international codes of conduct... Especially in the banking and financial system. Recently, a series of our banks have continuously expanded their locations, increased capital, and signed strategic cooperation agreements with foreign investors to take advantage of capital, management experience, and advanced technology to develop our banking and financial system to the regional and world level.

Faced with that need, on August 17, 2007, Rach Kien Rural Commercial Joint Stock Bank was officially approved by the Governor of the State Bank of Vietnam to convert its operating model into an Urban Commercial Joint Stock Bank and change its name to Dai Tin Commercial Joint Stock Bank to create conditions and premises for the bank to develop in the near future.

The approval for Dai Tin Bank to convert its operating model from a Rural Joint Stock Commercial Bank to an Urban Joint Stock Commercial Bank creates favorable conditions for the bank to improve its financial capacity, expand its business network, and be competitive and develop, marking a new development stage of the bank with the goal of striving to become a modern retail joint stock commercial bank according to international standards, providing products and services.

Diverse products and services from basic to high-end, completing the goal of making the bank one of the banks with good service quality in Vietnam.

With many years of experience in lending activities to serve agricultural development in the area with many specific industries such as: mechanics - barge assembly for waterway transport, aquaculture, vegetable growing... with a team of dedicated staff, understanding the needs of farmers. These are the advantages that Dai Tin Bank will continue to promote as well as offer new solutions to help the bank achieve the set goals such as:

- Increase charter capital: Ensure the roadmap set by the State Bank of Vietnam, by 2010 charter capital will be over 3,000 billion.

- Developing mobilized capital: With banking products and services, Dai Tin Commercial Joint Stock Bank mobilizes capital sources in the economy to ensure the Bank's operations are increasingly developed, stable, safe and effective.

- Identifying business objects and policies: In the immediate future, the Bank identifies appropriate credit investment objects to both quickly generate profits and ensure stable and long-term business operations. The Bank has a policy of focusing investment on small and medium enterprises, which are the type of enterprises with the strongest growth rate in recent years. Researching investment, participating in joint ventures to contribute capital, for a number of key projects; restructuring profitable assets to ensure safe and stable operations through investment activities in the interbank market, bond and securities investment.

- Developing Banking services: Focus on upgrading the quality of existing services to serve customers better and better, creating conditions to support the development of other operations. Cooperate with other banks to develop Banking services to serve customers better and better.

- Developing the operating network: Developing the network helps the Bank to approach and bring the Bank's products to customers. Dai Tin Bank continues to develop the network to key economic regions in the country.

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