Financial Services, Latvia, Legislation, Loan, Real Estate

Saeima approved amendments to the Insolvency Law, removing the non-recourse debt provision from the law. It means that the non-recourse debt option will not apply exclusively to individuals involved in an insolvency process. The amendments also alter debt payment schedules for persons who are ruled insolvent.

Under the new legislation, borrowers will be permitted to choose either a standard mortgage agreement or the new version where the property alone will serve as collateral for the mortgage.

Other amendments were made to the Personal Income Tax Law and Corporate Income Tax Law.

The bills were submitted by ruling coalition MPs Solvita Aboltina (Unity), Gaidis Berzins (All For Latvia-For Fatherland And Freedom/LNNK), Karlis Sadurskis (Unity), Einars Cilinskis (All For Latvia-For Fatherland And Freedom/LNNK), Augusts Brigmanis (Greens/Farmers) and Edgars Putra (Greens/Farmers).

The amendments have been harmonized with the Bank of Latvia's viewpoint.

As reported, at the end of last year Saeima postponed amendments to the Insolvency Law until March 1. The government approved amendments to the Insolvency Law on September 25 and originally agreed that they would come into effect on January 1 this year. According to the amendments, bank mortgages issued to borrowers who buy a home/apartment, and have no other domicile, would be considered non-recourse loans. Commercial banks were very critical of these amendments, saying that they would cause credits to become more expensive due to which commercial banks would no longer interested in the state housing support program for families with children. The president promulgated the law, yet criticized the risks that these amendments could pose to Latvia's national economy.