Mortgage finance is governed in Egypt by Law No. 140 which was issued in
August, 2001 (the Law). According to the Law, mortgage finance is
interpreted as a method for financing the purchase, construction,
restoration and/or development of houses, administrative units, service
foundations and any buildings designated for practicing trade. The EFSA
is assigned to supervise mortgage finance activities in which the
following main market players are involved:
• Mortgage finance companies.
• The Egyptian Mortgage Refinance Company (EMRC).
• Securitization authorities.
• Mortgage finance intermediaries.
• Mortgage finance appraisers.
• Mortgage finance agents
• The credit bureaus and insurance companies, which act as parties
complementing the mortgage finance process.
EFSA Role in Mortgage Finance
EFSA is authorized to supervise the mortgage finance affairs, set the
controls ensuring market efficiency, follow up, control and development,
and undertake all the measures that maintain the rights of all market
dealers. The EFSA is specifically assigned to:
• Make the general policies required for directing mortgage finance
• Grant licenses to the mortgage finance companies for practicing
• Decide upon all applications submitted by companies regarding mergers,
suspension of activities and/or total or partial liquidation of assets.
• Keep and maintain schedules and registries for listing real estate
appraisers, mortgage finance intermediaries and real estate agents,
granting them licenses, supervising their activities; and for listing
the related auditors.
• Set the Financial Reporting Standards (FRS) for companies.
• Control and supervise the companies and impose administrative
penalties on violators.
• Undertake anti-money laundering procedures.
• Protect investors and dealers operating in the mortgage finance
Mortgage Finance for Low-Income Families
For the purpose of easily providing affordable housing to low-income
families, a mortgage finance subsidy and guarantee fund was established
by virtue of Presidential Decree No. 4 for 2003; and is now under the
EFSA control. The term "low-income" refers to any person whose total
monthly income does not exceed LE 17500 and to any family whose total
monthly income is no more than LE 2,500. The fund is assigned to finance
residential units at a maximum level of finance of LE 95,000 per unit.
The Egyptian Mortgage Refinance Company (EMRC)
EMRC was established in June 2006, with a capital of 212 Million
Egyptian Pound and with the objective of providing long-term finance to
the mortgage finance companies and the banks operating in this field of
service. Finance is collateralized by the real estate portfolios of
companies and banks and is granted according to specific rules and
controls. In this respect, EMRC resolved to issue bonds duly
collateralized by real estate loan portfolios, which help enhance the
bond market and provide long-term finance resources.
Developing the Mortgage Finance Activity
Since July 2004, the Government policies has been aiming to develop and
reform the financial sector, organize markets, develop the markets'
organizational and legislative structure, support the regulatory
frameworks, enhance the capital structure of financial institutions,
protecting dealers' rights. The reform program for non-banking financial
services sector consisted of two main phases; the first phase for
(2005-2008) and the second phase for (2009-2012). The first phase has
been aiming to establish the financial institutions, ensure their
integrity and develop pertinent strict controls ensuring due efficiency,
stability and liquidity of the financial sector. With respect to the
mortgage finance market, this phase has also been aiming to raise the
market efficiency level by adopting the following targets:
First: Development of the Legislative Framework Regulating
• Amending the Executive Regulations of Mortgage Finance Law No. 148 for
2001, which was issued by virtue of Premier's Decree No 465/2005; these
regulations provided various facilities to market dealers, particularly
in respect of the means for proving the investor's revenue and
specifying the investors entitled to benefit from the "mortgage finance
subsidy and guarantee fund", and in regard to the approval standards
pertinent to the mortgage finance intermediaries and appraisers.
• Adding a new chapter to the Executive Regulations of Capital Market
Law No 95 for 1992, allowing for conducting securitization activities so
as to activate the secondary market.
• Amending a number of provisions of CBE Law No. 88 for 2003, to
regulate the scope of exchanging information and data pertinent to
clients' debts and credit facilities. Such amendment covers the mortgage
finance and financial leasing companies, and allows for incorporation of
companies rendering credit reporting and credit rating services.
Second: Development of the Institutional Framework and Regulatory
Controls to Protect Market Dealers' Rights and Enhance Transparency
• Developing the regulations and controls whereby licenses are granted
to companies for practicing mortgage finance and to the competent
mortgage finance experts, such as intermediaries, agents and appraisers.
• Developing the standard forms of mortgage finance terms and
agreements, to facilitate securitization dealings.
• Setting the general rules and controls that regulate market dealings
in accordance with the highest international practices and pursuant to
the recommendations given by Basel-2 Conference.
• Unifying all the procedures used for calculating the schedules of debt
amortization and finance installments.
• Issuing mortgage refinance controls and setting the regulatory
framework required for the Real Estate Investment Trusts (REITs)
• Issuing controls regarding the acquisition of shares in the licensed
mortgage finance companies.
• Developing regulatory controls over mortgage finance companies, with
respect to anti-money laundering and anti-terrorism funding.
• Facilitating the real estate foreclosure procedures and reducing the
period of time required to do so.
• Issuing regulatory controls with respect to granting mortgage finance
in foreign currencies.
• Providing insurance coverage against the risks of death and paralysis,
as required for enhancing the mortgage finance market.
Third: Development of Real Estate Registration System (Registry of
Deeds) and Removing the Pertinent Obstacles
• Reducing the real estate registration charges to be LE 2000 at
maximum, by virtue of Minister of Justice Decree No. 5424 for 2006.
• Facilitating the real estate registration procedures applied to the
new urban communities. In this respect, a protocol was signed with the
New Urban Communities Authority, allowing for transformation of the
"allocation letters" into "recordable legal documents" and permitting
partial registration of projects. .
• Exempting the mortgage finance contracts from the proportional stamp
Fourth Development of the Secondary Market
• Incorporation of the EMRC in June 2006, with the objective of
providing long-term finance to the mortgage finance companies and the
banks operating in this field of service. EMRC grants finance duly
collateralized by real estate portfolios, thus reducing the credit risks
and the interest rates imposed on the loans granted to clients. This is
in addition to initiating securitization dealings.
Fifth: Providing More Housing Opportunities by Expanding the
Mortgage Finance Beneficiaries Base
• Enhancing the role of mortgage finance subsidy and guarantee fund, and
developing the pertinent mechanisms.
• Expanding the beneficiaries' base of fund subsidies by raising the
maximum limit of monthly income of subsidy-entitled clients to LE 1750
per month for singles and LE 2500 per month for families, by virtue of
Premier's Decree No 1846 for 2008.
• Raising the value of fund's subsidy to LE 15,000 in stead of LE
10,000, and further raising the maximum price of subsidized residential
unit to LE 95,000.
• Cooperating with the Private Sector to provide residential units to
low-income families. In this respect, various housing projects were
established by the Private Sector and subsidized by the fund.
Sixth: Spreading and Raising Awareness of Mortgage Finance
• Launching various wide-scale awareness campaigns on the TV, radio and
• Developing an investor guide with the aim of protecting investors and
informing them of their rights and obligations.
• Participating in various exhibitions and conferences to describe and
introduce the mortgage finance activity to the public.
• Issuing various printed materials and guidelines to raise peoples'
awareness of the importance and the procedures or mortgage finance,
including an EFSA Mortgage Finance Services Guideline and a leaflet
describing the role of the mortgage finance subsidy and guarantee fund.
• Holding various training course for real estate appraisers, in
cooperation with a group of authorized trainers.
• Holding the annual Euromoney Conference for Investment and Mortgage
Finance which is considered the first specialized conference in this
field of services.