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CMN regulates the use of real estate as collateral in multiple financing arrangements

Resolution expands possibilities based on the legal framework of guarantees.

From the Editors

 

Thursday, January 2, 2025

 

Updated at 13:36

 

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The  CMN -  National Monetary Council revised the rules for real estate credit operations, allowing the use of the same property as collateral for more than one operation.

 

The measure was regulated based on the legal framework for guarantees,  law 14.711/23 , which brought innovations to the legal regime of mortgages and fiduciary alienation, expanding the possibilities of using real estate as guarantees in multiple financing. 

 

Among the highlights of resolution 5,197/24 is the regulation of the sharing of guarantees, which now provides that the sum of the value of the new operation and the outstanding balances of previous operations cannot exceed the credit quota limit applicable to the predominant operation. 

 

Furthermore, the remuneration, updating and amortization conditions of new operations may differ from those originally agreed.

 

CMN allows properties to be used as collateral in more than one real estate credit transaction. 

The rule also authorizes financial institutions to require security guarantees in loans secured by residential properties, covering risks of death, permanent disability and damage to the property.

 

This requirement seeks to protect borrowers and their families, especially in transactions involving housing finance combined with loans. However, the borrower's freedom to choose the insurance policy remains. The resolution comes into effect on July 1, 2025.

 

According to the Central Bank, the changes seek to optimize the use of real estate assets, encouraging the expansion of real estate credit, especially for individuals, while preserving the security of operations and the sector's origination rules .

 

Check the full resolution here .

 

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BC surveys public opinion to regulate novelties in the legal framework for guarantees

Mauro Antonio Rocha

The Central Bank of Brazil, which has always decided internally on the regulatory contours of the matter in question, surprises by proposing a public opinion survey to update CMN Resolution 4,676/18.

Wednesday, September 18, 2024

 

Updated September 17, 2024 1:32 PM

 

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1. In the coming days, Law 14.711/23, which came to light with the " presumptuous and even misleading  epithet of  Legal Framework for Guarantees , will complete its first year with its main subjects - the extension or recharging of the fiduciary guarantee and the subsequent fiduciary alienation of real estate - still wandering like a specter in search of regulation through the corridors of the Central Bank of Brazil, which does not seem very willing to assume paternity or responsibility for the malformed fetus. The proposal to update Resolution CMN 4.676/18 has been in process for almost six months, " in an endless back and forth " and without any visible progress among the representative entities, the financial institutions and the BCB, which is now proposing an opinion poll with the intention of allowing participation in the elaboration of rules that will affect the entire society . 2

 

2. The aforementioned resolution descends from Resolution 1,090, of 1/31/86, which - just to set a timeline that is relevant to this article - can be considered the beginning of a sequence of normative acts published to provide, among other issues, on requirements for directing a percentage of resources raised in savings deposits to finance the production and sale of real estate, requirements for granting real estate credit and guarantees accepted for operations.

 

From the distant summer of 1986 until the smoky spring of 2024, the content of the original resolution was changed dozens of times before its revocation and replacement, on 4/30/83, by CMN Resolution 1,980, which approved the disciplinary regulation for the direction of resources raised by the entities that are part of the SBPE and the financing operations carried out within the scope of the SFH and was also changed, revoked and replaced by other administrative rules, culminating in the publication, on 7/31/18, of the aforementioned CMN Resolution 4,676 which, having undergone more than a dozen changes, remains in force.

 

The long introduction is used to demonstrate that, without prejudice to the legitimate, democratic and healthy procedure of prior submission - for opinion and review by representative entities and main financial institutions - of proposals to modify the administrative rule, over the last forty years the Central Bank of Brazil has always decided internally, in accordance with the specific needs and objectives of monetary policy, the contours of regulation of the matter in question, which is why the call for public opinion research is strangely surprising, according to the Social Participation Notice BCB 105, of 11/9/24, for the regulation of the matter and issuing of a resolution.

 

3. The survey consists of four proposals with which the interested party must agree or disagree, justifying their opinion, and may choose to abstain.

 

3.1 The first proposal provides that, in the event that the same property serves as collateral for more than one credit transaction, the ratio between the sum of the outstanding balances of the transactions and the appraised value of the property given as collateral, on the date of contracting the new transaction, may not exceed the financing quota limit applicable to the predominant credit transaction (thus understood as the one that has, on the date of contracting the new transaction, the highest value between the nominal value of the new transaction and the outstanding balance of each of the transactions already guaranteed). If there is no established limit, said ratio may not exceed the limit applicable to the transaction with the highest balance, considering the transactions that have an established limit. (Art. 6 of Resolution 4,676 of 2018, with the amendments to § 2 and the inclusion of the proposed §§ 3 and 4).

 

The answer is partially disagreeing. In general terms, the proposal repeats the provisions contained in articles 9º A and 9º B introduced in law 13.476/17, except when proposing that " the ratio between the sum of the outstanding balances of the transactions and the appraised value of the property given as collateral, on the date of contracting the new transaction, may not be higher than the financing quota limit applicable to the transaction ", as it directly contradicts § 4º of the aforementioned art. 9º B, which expressly provides that the extent of the fiduciary alienation may not exceed the final payment term and the guaranteed value stated in the original guarantee title.

 

It seems clear that the value of the guarantee contained in the original title, as referred to in the legal text, corresponds to the value indicated in the fiduciary alienation contract " for the purpose of sale at public auction " and to the  criteria for the respective review , as provided for in item VII of art. 24 of law 9,514/97.

 

We know that:

 

The highlighted text of the law was carefully adopted to - in the context of simplifying the granting of credit - exempt the prior assessment of the real estate offered as collateral, as well as - and mainly - exempt the property from assessment at the time of foreclosure and offer for sale at auction;

The value of the property indicated in the large number of signed fiduciary guarantee contracts reflects the value of the transaction itself, the market consultation or the mere price estimate;

The review criteria are rarely negotiated between the parties, generally adopting the review by monetary variation indexes or interest and charges used to remunerate the amount borrowed.

Therefore, the determination of the reason referred to in the standard consulted must respect the criterion(s) originally indicated for the review of the property value and the use of the appraisal value, on the date of the new transaction, will only be admissible if - and when - it is expressly included in the criteria listed.

 

3.2. The second proposal establishes the obligation, in loan operations to individuals secured by residential properties, to contract insurance coverage that provides, at a minimum, coverage for the risks of death and permanent disability of the borrower and physical damage to the property. The conditions for offering, stipulating, contracting and replacing the coverage provided for in the legal and regulatory provisions (Resolution 3.811, of 11/19/09, issued by the National Monetary Council) that regulate these aspects for housing finance operations must be met. (Inclusion of art. 5º-A in Resolution 4.676/18)

 

The answer is in agreement. Considering that MIP and DFI insurance coverage are already mandatory, the proposal should refer to loan operations in general, without a specific purpose, with real estate collateral (home equity, for example) and will serve to ensure greater legal security for contracts.

 

3.3 The third proposal contemplates the inclusion of a set of definitions to be used for the purposes of Resolution 4,676/18, in order to provide greater precision and clarity to the normative act. (Art. 1º-A proposed for inclusion in Resolution 4,676, of 2018). The concepts provided for are as follows:

 

Real estate credit operations: Real estate financing operations and credit operations that have real estate as the sole guarantee or as the highest value guarantee, except for operations that qualify as rural credit; and

Real estate financing: Credit operations intended for the acquisition, construction, production, renovation and expansion of residential and non-residential properties and those intended for the acquisition of materials for the construction, expansion and renovation of residential and non-residential properties.

The answer is consistent with the usefulness of the definitions for the practical applications of the standard.

 

3.4 The fourth proposal provides that amortization systems for credit transactions with a clause for updating the outstanding balance by price index may include an additional amortization component aimed at minimizing variations in the nominal value of the installments, and this component may not be higher than the average value of the price index used, considering a period equivalent to that of the credit transaction contract. (Art. 5 of Resolution 4,676 of 2018, with the amendments to § 2 and the inclusion of the proposed §§ 3 and 4).

 

The response is inconsistent with the proposed text due to the lack of transparency regarding the objectives sought. The limiting criterion adopted is not sufficient to clarify the need, effects and scope of the authorized  additional amortization component .

 

4. Finally, the silence - in the draft resolution update and in the social participation notice - regarding the fiduciary alienation of supervening real estate is notable, denoting the scruples of that agency in relation to the legal device that introduced the new type of  guarantee , especially regarding the absence of limits for contracting, forcing the acceptance of operations that, strictly speaking, will be devoid of the required guarantees and exposed to the risks of default during the entire period of suspension of registration.

 

5. The above considerations were presented on behalf of AD NOTARE - National Academy of Notarial and Registry Law in response to the aforementioned public research notice, as a way of collaborating in updating the important and necessary regulation of the matters covered.

 

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1 Pinto da Silva. Flávio Rocha. Real guarantees in the preliminary draft of the reform of the Civil Code: lessons from the preliminary draft of the thematic study group and the Legal Framework for Guarantees, Migalhas Bulletin, edition of 08/28/2024.

 

2 BC launches public opinion survey to review rules on mortgages and fiduciary alienation. https://aprendervalor.bcb.gov.br/detalhenoticia/20310/nota. Accessed on 09/16/2024.

 

link: https://www.migalhas.com.br/depeso/415413/bc-pesquisa-opiniao-para-novidades-do-marco-legal-das-garantias