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Summary: Interpretations regarding the grace period under the Preferential Housing Loan program and applying preferential interest rates to successors. Open new window for Chinese

Ref. No:2000.10.27 (89)Tai-Yang-Ye-Tze No. 020035698

Subject:

With respect to questions relating to financial institutions making loans under the “Preferential Housing Loan and Credit Guarantee Program for Youth” and the “NT$200 Billion Preferential Housing Loan Program”, please refer to the following Explanations and forward this Letter to all lending financial institutions under these programs for reference.

Explanations:

1.This is in response to a letter of your bank, dated September 21, 2000 (Ref. No. Zong- Zhuan –4-Zi-890022165) and in accordance with a letter of the Ministry of Finance, dated October 23, 2000 (Ref. No.Tai-Cai-Rong -89757997).

2.According to Question 9 of the “Q&A for the Preferential Housing Loan and Credit Guarantee Program for Youth and the NT$200 Billion Preferential Housing Loan Program”, as approved by the Ministry of the Interior, the Ministry of Finance and the CBC on August 31, 2000, the provision relating to “the maximum amortization period shall be 20 years, including a 3-year grace period (during which the borrower pays the interest but not the principal); from the fourth year onward, the principal and interest shall be amortized over the remaining of the term to maturity by the annuity method. If the borrower wishes to prepay the principal prior to maturity, the lending financial institution cannot refuse” shall be interpreted as follows: if a borrower, in consideration of fund allocation or reducing financial burdens, chooses at the initial stage of the loan to repay the loan by equal installments, the lending financial institution cannot refuse. On the other hand, a lending financial institution shall not force a borrower to repay the principal and interests by equal installments at the initial stage of the loan.

3.If a borrower under either of the above two programs deceases before the loan matures and his successor assumes the outstanding loan balance, the successor is entitled to the preferential interest rate thereon.

4. As to the question whether lending financial institutions under the programs may concurrently offer two ways, one lump sum or annual payments, of collecting guanrantee fees from their customers, CBC advised that fee collection method of each financial institution should be consistent in order to simplify the bank’s account operations, and to avoid unneccessory complications and errors in processing loans under the Small and Medium Enterprise Credit Guarantee Fund. In addition, the Small and Medium Enterprise Credit Guarantee Fund has agreed to assist and respond to inquiries regarding an applicant’s spouse from financial institutions making loans under the Preferential Home Loan and Credit Guarantee Program for Youth, if their inquiry document lists information of relating to that spouse.

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