Laws and Regulations Database of the Central Bank of the Republic of China(Taiwan)

１ These Directions are prescribed in accordance with the Executive Yuan’s decision on August 14, 2000, August 17, 2001, April 11,2002, January 10, 2003, August 22, 2003, May 30, 2004 and May 20, 2005 to launch a preferential housing loan program (hereinafter referred to as "the Preferential Loan Program") for purposes of revitalizing domestic traditional industries and reducing the housing loan interest burden of citizens.

２ Lending financial institutions and loan allocation: To be jointly prescribed by the Financial Supervisory Commission, Executive Yuan and the Central Bank of China; the same shall also apply to subsequent adjustments.

３ Fund sources of the Preferential Loan Program: To be provided from the funds of the lending financial institutions; should such funds be insufficient, the Central Bank of China shall provide of additional funds.

４ Period for processing of loans by lending financial institutions under the Preferential Loan Program: From August 14, 2000 to September 30, 2006.

５ Conditions attached to the Preferential Loan Program:

(1)Program size: NT$1,680 billion (originally set at NT$200 billion on August 14, 2000, then increased by NT$200 billion on August 17, 2001, April 11, 2002 and January 10, 2003, NT$280 billion on August 22, 2003 and NT$300 billion on May 30, 2004, May 20, 2005).

(2)Lending rates: Calculated as a floating rate pegged to the Chunghwa Post Co., Ltd. ’s floating interest rate on two-year time deposits plus 1 percent.

(3)Government subsidization at a fix rate per annum: 0.85% for the NT$400 billion appropriated on August 14, 2000 and August 17, 2001, 0.425% for the NT$200 billion appropriated on April 11, 2002, 0.25% for the NT$200 billion appropriated on January 10, 2003, and the NT$280 billion appropriated on August 22, 2003, and 0.125% for the NT$300 billion appropriated separately on May 30, 2004 and May 20, 2005 to be budgeted and paid by the Ministry of the Interior on a yearly basis.

(4)Actual interest rate paid by the borrower: The lending rate of the financial institution less the government subsidization rate.

(5)Ceilings per household:(i)Maximum loan value per household in Taipei City is NT$2.5 million.

(ii)Maximum loan value per household in other areas is NT$2 million.

(6)Maturity and method of repayment: Maximum 20 years, including a three-year grace period (during which the borrower pays the interest but not the principal); from the fourth year, the principal and interest shall be evenly amortized for the remainder of the term to maturity by the annuity method.

(7)Prospective borrower: A Republic of China national of at least 20 years of age, eligible for one housing unit only.

(8)Applicable buildings: Used and new housing units of which the ownership transfer registration has been completed on/after November 20, 2004, and on the title of which the purpose of the building is registered as including "residence" or "dwelling."

6 If a borrower fails to repay the principal/interest for six months or longer, the loan shall be listed as an overdue and non-accrual loan, and the borrower shall no longer be eligible for interest subsidy. After the disposal of the collateral by the lending financial institution to settle the outstanding loan balance, the national treasury shall recover the interest subsidy applied for the (180-day) period from the initial date of failure to make payment to the payment call date. If the proceeds from disposal of the collateral fail to discharge the balance of the loan owed by the borrower, the national treasury will not pursue the recovery of the interest subsidy.

Where normal repayment is resumed on an overdue account under the preceding paragraph, the interest subsidy shall be reinstated from the initial day normal payment is resumed.

7 Managing financial institution: A managing financial institution may be selected to co-ordinate the overall accounting of interest subsidies of the lending financial institutions, conduct computerized accounting audits, develop operational guidelines, and design tables and forms. The managing financial institution shall enter into allocation and remittance contracts with the lending financial institutions for the purpose of administering the above-stated matters.

8 The credit risks involved in the Preferential Loan Program shall be borne by the lending financial institution.

9 The Preferential Loan Program may be administered in conjunction with other overnment home loan programs (such as loans for public housing, and labor, government employee, and teacher housing), with the exception of the Low Interest Rate Loan Program for Young Home Buyers and the Preferential Home Loan and Credit Guarantee Program for Youth.

10 The borrower’s eligibility for the loan shall be revoked if the borrower violates Direction 5, subparagraph (7), or Direction 9; in such event, the applicable lending rate for the total loan amount drawn from the Preferential Loan Program shall be changed, retroactive to the loan drawdown date, to the lending rate for general home loans provided by the lending financial institution.

11 Financial institutions participating in the Preferential Loan Program shall faithfully abide by regulations related to credit extension and may not grant loans in bulk to construction enterprises or reserve loan quota for construction enterprises or real estate brokerages; in the event of a violation of these provisions, the lending financial institution shall bear the interest previously subsidized by the government.

12 The lending financial institution shall list the Preferential Loan Program as a focal point of its internal audit. Financial examination departments shall conduct ad hoc inspections of the Program as circumstances dictate, and the Program shall also be listed as a focal point of ordinary business inspection.