Important features of Law 9.514 of November 20 1997 include:
- Conditions of real estate financing can be freely agreed between the parties.
- A new form of guarantee functioning as a fiduciary assignment of real estate (title of the property remains with the creditor until the underlying obligation is paid in full).
- Real estate financing may be guaranteed by the new form of guarantee and/or conventional mortgages and/or fiduciary assignments of credits and/or pledges. Any assignment of rights necessary under the guarantees will not depend on notification to the relevant debtors.
- Repossessions of properties are faster and easier in cases of default.
- Special purpose companies (SPCs) will be non-financial institutions in the form of companies by shares and will be allowed to acquire credits (assets) resulting from real estate financing.
- Assignment of assets to an SPC will not depend on notification to the relevant debtors.
- SPC will issue asset-backed securities denominated 'certificates of real estate receivables'.
Central Bank's Circular 2.783 of November 15 1997 reduced the minimum average term for loans requiring repayments in foreign currency. The original term of 36 months was reduced to:
- 12 months for new operations with disbursements sent to Brazil before March 31 1998;
- six months for re-scheduling of operations maturing by March 31 1998.
A much needed constitutional amendment has been approved by the lower house of Congress and is now to be approved by the Senate in two readings. The amendment includes the abolition of the lifetime job guarantee for civil servants. Final approval should allow the public deficit to be substantially reduced.
Eliana Maria Filippozzi