This content is from: Local Insights

Colombia

The Superintendency of Securities has set out to unify the provisions regarding the issuance of mortgage bonds in Colombia. This comes with the issuance of Resolution 542 of 2002 which replaces Resolution 89 of 2000.

The principal objective of this resolution is to authorize credit institutions to issue mortgage bonds, guaranteed by existing mortgage agreements, where resolution 89 of 2000 only permitted the issuance of the mortgage bonds to finance new mortgage agreements.

Mortgage bonds that are issued to finance mortgage credit agreements are denominated Mortgage Bonds, while those bonds that are issued with the guarantee of mortgage credit agreements previously executed, are denominated Structured Mortgage Bonds. In this way, loans financed with Mortgage Bonds, constitute specific guarantee of such bonds, while the existing credit agreements will serve to guarantees the Structured Mortgage Bonds, plus additional guarantees, if applicable. The mortgage portfolio which serves as guarantee either of the Mortgage Bonds or of the Structured Mortgage Bonds, will not be part of the issuer's liquidation estate, in the case of its liquidation.

Another important modification consists in allowing the mortgage bonds to be guaranteed by mortgagee credits, granted under any of the UVR amortization systems approved by the Banking Superintendency, and not only of agreements granted under the constant quote in UVR system, as Resolution 89 of 2000 established.

Of the requirements and conditions required for its issue, the term of the mortgage bonds has been amended in the sense of setting out that the term of the mortgage bonds must be equal to or superior to the term of the mortgage credit agreements. As per Resolution 89 of 2000, the term of the mortgage bonds had to be equal to or inferior to the term of the mortgage credit agreements.

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