8/11/2019 Elvin Meka - Editorial - Mortgage Loans - Did They Turn the Corner - Final(2)

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MORTGAGE LOANS did they turn the corner?It is easily understandable that, despite problems of a cyclical and non-cyclical nature that usually

accompany construction and mortgage loans, their financing will continue incessantly. At this

point, the remaining challenge for banks is to ensure and obtain an efficient and balanced

combination between a manageable exposure to them and selecting quality clients.

Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common

sense, paid for in full, and managed with reasonable care, it is about the safest investment in

the world. Franklin D. Roosevelt! It is for such interesting statement of the 32ndPresident of

the United States of America, Mr. Franklin D. oose!elt, that an"one could easil" understand

the e#clusi!it" $hich characteri%es the real estate, construction sector and its res&ecti!e

financing. 'echnicall", the a&&roach of (anks and other financial institutions to$ards real

estate, construction ) housing and financial &roducts, the" model and design, differ *uite

su(stantiall" from all the rest of &roducts and ser!ices the" offer in the market. 'his is sim&l"

e#&lained (" the s&ecial role and &lace, the +home &la"s and takes, as one of the most

im&ortant in!estments throughout e!er"ones life. -n the other hand, the construction sector

has, (" contrast to all other sectors of national econom", the a(ilit" to create a t"&icalinterlinking net, (et$een industries and man" other sectors of the econom", (e the" in the

manufacturing, or ser!ice sector, along $ith em&lo"ing a relati!el" high num(er of la(or

forces.

onstruction and housing remain *uite interesting for (ank financing, for man" reasons, like/

no one could &ro!ide that sort of collateral the" do0 mortgage loan installment $ould (e

reasona(l" among the first o(ligations an"one $ould &a" regularl"0 no other assets are not

assessed or re!alued, o!er time, as real estate and assets do0 the a(solute ad!antage these

assets ha!e, in relation to other t"&es of assets, to ser!e as underl"ing assets for designing and

creating structured financial &roducts, $hich are $idel" traded in glo(al financial and

securities markets. 1ut the relati!el" high e#&osure to the construction sector and mortgageloans is usuall" associated $ith certain risks, &articularl" in the frame of financial and

economic crises, and also $hen the econom" enters its contracting and do$ns$ing c"cle.

Moreo!er, the longlasting international e#&erience has sho$n that a(normal e#&osure to real

estate, construction sector and mortgage loans constitutes one of three elements that t"&icall"

and classicall" accom&an" a financial crisis, along $ith the e#cessi!e use of financial

le!erage and $eak risk management ) anal"sis.

o$ it is cr"stal clear the $eight and effect, real estate, construction and mortgage loans

&ortfolio, had and still continues to e#ert, on non&erforming loans of the Al(anian (anking

s"stem, as $ell as the actual situation and the near future of this sector, $ithin the national

econom". Surel", the cost $eathered (" (anks in this regard $as and is not modest, (ut

ne!ertheless, it ser!ed to gain a !alua(le e#&erience, to carr" on $ith construction and

mortgage financing, (ut through a more &rudent and (etter *ualit" management &rocess. It is

for this e#&erience that is hel&ing (anks no$ to resha&e their a&&roach to$ards construction

and mortgage loans, $hich in turn, is resulting in some interesting and attracti!e offers for

customers. 'he" are *uickl" ada&ting to the ne$ trends of citi%ens lifest"le and market

re*uirements, (" &a"ing ma#imum attention, of course, to com&l" $ith 4 s of lending

&rocess, at the fullest &ossi(le. It is easil" understanda(le that, des&ite &ro(lems of a c"clical

and nonc"clical nature, that usuall" accom&an" construction and mortgage loans, their

financing $ill continue incessantl". At this &oint the remaining challenge for (anks is to

ensure and o(tain an efficient and (alanced com(ination (et$een a managea(le e#&osure tothem and selecting *ualit" clients. 'his is so, (ecause the loan *ualit", $hich is

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fundamentall" (ased u&on the (orro$ers credit$orthiness, remains the cornerstone for a

*ualit" and &rofita(le loan &ortfolio5