1.1 Pre-finance Loans
- Pre-financing loans are advanced to banks that have recently launched their residential mortgage product hence do not have sufficient residential mortgages for refinancing transaction or have residential mortgages, but these mortgages do not comply with TMRC mortgage eligibility criteria.
- These loans are secured by government securities with minimum required coverage ratio of 100%. A debenture over government security is created to secure the facility and the government security is pledged as collateral in TMRC’s CDS account.
- Borrowers that access pre-financing loans need to ensure the facility availed is converted into residential mortgages complying with TMRC mortgage eligibility criteria at the following annual conversion rates:
At the end of year 1 | At the end of year 2 | At the end of year 3 |
At least 33% of the loan to be converted to disbursed residential mortgages meeting TMRC eligibility criteria. | At least 66 % of the loan to be converted to disbursed residential mortgages meeting TMRC eligibility criteria. | 100% of the loan to be converted to disbursed residential mortgages meeting TMRC eligibility criteria. |
1.2 TMRC Mortgage Eligibility Criteria
Loans refinanced by TMRC must meet the following eligibility criteria:
- Loans refinanced by TMRC should be fully disbursed and should be for the purchase, refinance, construction, or renovation of a residential building.
- Residential mortgages refinanced with TMRC should have 11% more in their total outstanding debt over TMRC facility at time of disbursement/renewal (Coverage Ratio 111%). During the tenure of the facility, the diminution in total value of the outstanding debt of refinance residential mortgage portfolio can be reinstated using other qualifying collaterals for limited time while disbursing or perfecting other residential mortgages for future replenishment and substitution.
- TMRC will accept only first liens.
- The residential mortgage payments are up to date at the point of refinance.
- The residential mortgage portfolio refinanced should at the time of refinance/replacement have a remaining weighted average life which expires on or after the maturity date of the facility to be provided/being provided by TMRC.
- The residential mortgages for refinanced portfolio must have performed for a minimum of 6 months prior to being used for refinancing/replacement.
- The mortgaged property is insured against fire up to its full insurable value with a loss payable endorsement designating the PML as the first loss payee.
- To the best of the knowledge of the mortgage originators, the residential mortgage borrower is not bankrupt and bankruptcy proceedings have commenced against the borrower.
- To the best of the knowledge of the mortgage originators, the residential mortgage borrower is not deceased.
- The residential mortgage has been extended in local currency only.
- The residential mortgage borrower is a natural person.
- There should be adequate provision in the mortgage instrument enabling the mortgagee to transfer the charge or assign all its rights, interest, and obligations under the mortgage instruments to any person as the mortgagee deems fit.
- TMRC shall refinance residential mortgages up to the value of TZS 500 million. (TMRC can partially refinance residential mortgage with values exceeding TZS 500 million as long as it refinances only that portion up to TZS 500 million limit however such residential mortgages (i.e. with values exceeding TZS 500M) shall not exceed a maximum of 25% of any given refinanced residential mortgage portfolio).
- Maximum refinanced mortgage to property value (value being the lower of property price and appraised value) of 90%. Loan-to-value of 100% can be acceptable provided additional collateral is provided in the form of fixed deposits, pension benefits/entitlement, collateral replacement indemnity or government securities whose total value shall be at least 10% of the value.