THE NATIONAL MORTGAGE INSURANCE CORPORATION: THE CONCEPT, ROLE AND IMPORTANCE

Abstract

THE National mortgage insurance corporation in Serbia has insured more than 80.000 loans since its establishment. Its existence has contributed to a large number of citizens obtain a housing loan, because a mortgage insurance achieves a lower interest rate. Through the National mortgage insurance corporation a mortgage insurance can be achieved for housing loans, or loans to individuals for purchasing of apartments without the state subsidies as well as for the subsidized housing loans, in which the state provides loan funds for the borrower, often without an interest rate. The loans provided are secured by a mortgage insurance, which is entered on the registered premises or the building under construction. When insuring or granting housing loans, a special attention is given to a criterion which represents a comparation between the value of the loan and the assessed value of the real estate. This criterion, the so-called LTV -loan to value, indicates the level of risk and insurance approval of a housing loan; the higher LTV, the higher the risk for both the bank and Corporation when accepting a credit insurance. Consequently, the height of insurance premiums to be paid to the Corporation depends, among the other criteria, on the height of the LTV value. At the lower LTV, it is prescribed the lower insurance premium that will be calculated. The Corporation is a legal entity established by law and it is responsible to the Government of Republic of Serbia. It has been established after the model of the Canadian Corporation (The Canada mortgage and housing Corporation), but there are similarities and differences, which are especially marked because of different periods of establishment as well as the stages through which there flowed the development of the Canada mortgage and housing Corporation.