Hungary to discontinue NET scheme
NET was set up in 2011 to help struggling debtors living in mortgaged homes, allowing them to buy back their repossessed homes under favourable conditions in recent years, said Andrea Bártfai-Mager, minister without portfolio in charge of the management of national assets.
A bill submitted on Tuesday would repeal the NET law and discontinue the programme, which has helped 155,000 people stay in their homes while getting rid of large debts, the minister said.
The NET programme has successfully contributed to the government’s goal of allowing all families to live in their own homes, Bártfai-Mager said, Most affected families who had previously had trouble repaying their FX mortgage loans have managed to buy back their homes, she added. (The press release claims a 90% success rate, but there are still about 100,000 non-performing mortgage loans in Hungary, now mostly held by debt collection agencies.)
Due to the large number of properties sold back to the original owners, NET’s property portfolio has shrunk significantly, so the company’s operation had to be reviewed for efficiency, the statement said. Its tasks, including managing instalments and the 4,600 remaining lease contracts, will be transferred to Hungarian National Asset Management Zrt.
With this decision, the government is sending a message that households who get into trouble with their mortgage payments after the current loan moratorium ends on 31 December will not receive similar assistance. Managing these debts will be left to the market players, including banks and debt collectors, which will avoid moral hazard but put affected debtors in an uncertain situation. Should the property market enter a slump, the value of the collateral property could fall below the amount owed in the case of non-performing loans.
Cover photo: Getty Images
