Regulation on integrated mortgage services through electronic systems

Introduction

On 21 June 2019 Minister of Agrarian Affairs and Spatial Planning/Head of the National Land Agency (MOA) Regulation 9/2019 on Integrated Mortgage Services through Electronic Systems came into effect. The regulation aims to develop mortgage services by:

• improving disclosure, punctuality, simplicity and affordability (among other things); and
• adapting mortgages to reflect changes in law, technology and the public's needs.

Scope of services

The National Land Agency provides integrated mortgage services through electronic systems (HT-El) for:

• mortgage registration;
• mortgage transfers (eg, due to a loan assignment);
• creditor name changes; and
• mortgage deregistration.

HT-El users

HT-El users are:

• 'creditors' (as defined under the Mortgage Law (4/1996), which can be individuals or legal entities; and
• National Land Agency officials.

Therefore, under the new regulation, an application for a mortgage registration, for instance, should be submitted by the creditor (previously, the Land Deed Making Official (PPAT) assisted with this process).

In order to use HT-El, creditors must be registered with the HT-El system. Registration requires submission of the following evidence online through the HT-El:

• electronic proof of domicile (ie, an email);
• a certificate of registration from the Financial Services Authority;
• a written statement that the registrant meets the relevant requirements and an acknowledgement of the provisions that apply to registered users; and
• other requirements that the MOA may impose.

Thus, if a creditor cannot satisfy the above requirements (eg, where it is a foreign party and therefore does not hold a certificate of registration from the Financial Services Authority), the mortgage must be registered manually (ie, not online).

General requirements

The general requirements introduced by the regulation are as follows:

• Applications must be submitted online. Therefore, applicants can keep the originals of the relevant documents (eg, land certificates). Applicants must submit a written statement to the effect that they take responsibility for the validity and correctness of the data in the electronic documents submitted.
• The land registered under a mortgage must be registered in the debtor's name. As such, the system cannot accommodate the provision of a mortgage or security by a third party.
• Following the submission of the application, the National Land Agency will issue, via the system:
  • a mortgage certificate with an electronic signature; and
  • an annotation of the mortgage, in the form of electronic documents.

The creditor can then print out the annotation issued by the National Land Agency and affix it to the relevant certificates (ie, land or condominium certificates). The printed annotation will become an inseparable part of the mortgage certificate.

• Mortgage certificates issued for a mortgage transfer, change of creditor or deregistration of a mortgage will be issued under the same number as the previous certificate containing the latest data. A special mark will be placed on the previous certificate to show that it is no longer valid.

Main differences

Based on the MOA regulation and current practice, the main differences between the conventional (non-electronic) and electronic system are set out below.

Prospects

At present, mortgage registration applications can be submitted through the abovementioned online system or manually. However, in future, the government aims for all such applications to be submitted online. To achieve this goal, the government will continuously upgrade the HT-El system.

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