Prevent developers from mortgaging customers' homes.

Increase transparency, increase sanctions.

According to real estate expert Phan Cong Chanh, when a house is mortgaged and the bank agrees to let the developer sell it without requiring release of the mortgage, the bank and the developer must resolve the matter themselves. If any risks arise, the bank and the developer will be held responsible, while the people will have their legitimate rights protected by law.

Many developers mortgage properties they have already sold to customers to banks.

However, to prevent developers from mortgaging customers' homes, Mr. Phan Cong Chanh suggested that authorities need to provide guidelines and regulations to resolve such cases in a way that benefits the people. Especially when people have acted legally, followed the correct procedures, and paid in full, the state must protect them and issue them land ownership certificates, instead of letting people suffer losses due to disputes or the developer's obligations.

"While the law already has many regulations, loopholes are still being exploited. It's necessary for authorities to intervene promptly, and if necessary, people can sue in court. The courts also need to issue very clear rulings, almost creating typical cases, like precedents, so that other developers, banks, and the public understand the issue and feel secure. At the same time, to minimize the risks borne by customers, information about mortgaged projects needs to be transparent and publicly disclosed. This disclosure must be clear, detailed, and regularly updated so that people are fully informed, not just general information mentioning the project name," Mr. Chánh proposed.

From a different perspective, Dr. Phan Phuong Nam (Ho Chi Minh City University of Law) cited Decree No. 16, analyzing that the act of not disclosing, disclosing incompletely, or disclosing incorrect information about real estate projects and housing construction investment projects can be fined from 100 to 120 million VND. The fine for conducting real estate business without fully meeting the prescribed conditions is 600 million VND. However, compared to the profits gained from exploiting legal loopholes in a large-scale real estate project worth hundreds or thousands of billions of VND, this fine is too low. Therefore, many developers intentionally violate the law, accepting the fines, causing significant harm to the rights of other parties.

Currently, the 2024 Real Estate Business Law has made some positive adjustments regarding the information disclosure obligations of real estate businesses. However, the lack of increased penalties to ensure appropriate handling of violations is also a limitation of the law.

Furthermore, the law stipulates that only after the Department of Construction issues a document notifying that the housing project is eligible for sale or lease-purchase can the developer mortgage the project, and must also release the mortgage before selling to customers. Simultaneously, they must also complete the procedures to obtain a notification from the Department of Construction confirming the housing project's eligibility. However, Mr. Chánh commented: This regulation is very difficult to implement without any mechanism to ensure developers comply. Because, immediately after receiving the notification from the Department of Construction, if the developer mortgages the project, they will use this notification to raise capital from customers as quickly as possible.

The mortgage must be released before selling to a customer.

To control developers mortgaging customers' properties to banks, Mr. Ngo Gia Hoang (Ho Chi Minh City University of Law) suggested that instead of requiring transactions to be conducted through real estate exchanges, the scope of notary offices should be strengthened and expanded. This could involve requiring notarization for real estate transactions where one or more parties are real estate businesses. The independent nature of notary services would help monitor and ensure compliance with the law by developers, brokers, and real estate consultants, thus protecting vulnerable parties.

At the same time, in order to maintain stability and order for economic development, it is necessary to build a mechanism to control transactions involving the purchase and sale of future housing units by real estate businesses.

"To ensure the safety of homebuyers, the law needs to be supplemented with regulations to enhance the responsibility of banks in managing collateral assets. Because when selling houses under construction, developers both borrow money from banks and raise capital from customers. If the raised capital is not closely monitored, developers may misuse it, investing in multiple projects simultaneously, leading to the risk of insolvency, inability to complete projects, and failure to hand over houses to customers. At this point, not only homebuyers but also the interests of the bank holding the collateral are affected. Therefore, once a housing project is mortgaged, the bank must be responsible for managing and supervising the collateral assets," Mr. Hoang suggested.

According to him, clearer regulations are needed to ensure the rights of homebuyers when handling mortgaged properties through project transfers. This is because the parties can dispose of the property by transferring the mortgaged real estate project to recover the debt.

To ensure the safety of homebuyers, the law needs to be supplemented with regulations to enhance the responsibility of banks in managing collateral assets. This is because when selling houses under construction, developers both borrow money from banks and raise capital from customers.

Mr. Ngo Gia Hoang (Ho Chi Minh City University of Law)

The developer of Phu Thanh apartment building commits to repaying the debt.

On June 25th, Company 585, the developer of Phu Thanh apartment building (Tan Phu District, Ho Chi Minh City), issued a press release affirming that it will repay the debt to "redeem" the apartments for its customers.

Currently, the total number of apartments in the project is 833. Of these, the company mortgaged the land title certificates in the form of future-formed assets for 219 apartments under mortgage contract number 104 dated August 4, 2010. During the real estate business operations in the 2010s, the real estate market was frozen, and bank interest rates reached 22-23% per year, causing difficulties for the company in its business operations and in arranging debt repayments to banks.

Faced with the company's difficulties, on November 3, 2022, Viet A Bank - Ho Chi Minh City Branch agreed to allow the developer to pay the debt according to each apartment code, and the bank would release the mortgage on each unit. To date, Company 585 has released the mortgage on 6 apartments (including one that was released in early June 2024). The developer proposed that Viet A Bank - Ho Chi Minh City Branch continue to support the company for the next 3 years to give the company more time to prepare equivalent assets to release the mortgage on the remaining 213 apartments (from now until 2027). Of the 213 apartments currently mortgaged at Viet A Bank, Company 585 still owes residents 5% of the apartment value, equivalent to approximately over 41 billion VND. Company 585 affirms that residents are not responsible to the bank; this responsibility rests with the company.

Source: https://thanhnien.vn/bong-dung-bi-ngan-hang-siet-nha-chan-dung-viec-chu-dau-tu-mang-nha-cua-khach-di-cam-185240625225312879.htm