A serious storm is brewing in Ukraine's financial sector. Banking associations have officially approached legislators with an idea that could turn the tables for millions of mortgage borrowers. The proposal involves partially lifting the moratorium on the confiscation of apartments for debts and radically simplifying the debt collection procedure.
Currently, legislation strictly protects housing: the confiscation of collateral property for debts is prohibited, and eviction from credit housing is limited. Bankers, however, propose removing these barriers, at least for safe regions. Their argument is simple: the current system makes loans for dishonest payers virtually free.
Notary Instead of Court
One of the main points of the proposal is the acceleration of money recovery. Today, to collect even a small amount on a consumer loan, a bank has to go to court, where cases often get stuck for months. The associations propose replacing this bureaucracy with a notary's executive inscription. They also want to reintroduce fines and change the rules for calculating interest, which are currently often frozen.
Representatives of Oschadbank assure that this is not a tool of pressure on those affected by the war. They emphasize that protection mechanisms for such categories of citizens must remain in force. However, experts see in this an attempt to create a legislative monopoly for creditors.
The Paradox of Honesty
Andriy Dubas, President of the Association of Ukrainian Banks, voiced the main pain point of the industry: "Today, it is not profitable to pay off a loan on time in Ukraine". According to him, a borrower can not pay for years and eventually pay off the debt without interest and sanctions. This, according to bankers, punishes honest people and encourages malicious defaulters.
Without changes, the associations claim, market mortgages in Ukraine will remain blocked. Despite the fact that the liquidity surplus in the system exceeds hundreds of billions of hryvnias, banks do not risk issuing loans due to legal risks and war moratoriums.
Lawyers' Opinion: Borrowers' Rights Under Attack
The legal community is meeting the initiatives with criticism. Lawyer Ihor Bykov calls the proposals an attempt to level borrowers' rights, allowing for the mass seizure of housing and debt collection bypassing classic judicial control. Lawyer Ihor Yasko reminds that since February 24, 2022, banks have no right to charge new fines and penalties. If they do so, the amounts must be written off.
Debt write-off is possible in only two cases: if the collateral property was destroyed by the war or if the loan portfolio is recognized as hopeless by agreement with the bank. For now, the chances of such radical changes passing through parliament remain extremely low, but the discussion about the future of lending in Ukraine is just beginning.
