HOUSING is a basic requirement to ensure stability in a family. Mortgages are considered a way to provide a national an opportunity to own his home. In our culture, owning a house is a top priority. It ensures family stability in the event the owner of the house loses his job, becomes disabled or passes away.
Studies have shown many families living in rented accommodations are left to the mercy of the landlords when the main income earner, usually the father, dies.
In some cases, the remaining family members are abused or blackmailed. There are many stories of women being abused when they have trouble paying the rent.
The new mortgage law is a solution for low-income families. Not to mention, this type of families are in majority in Saudi society. But the mortgage law, if not protected by regulations to prevent misuse, can turn into a big social and economic problem.
A mortgage is a double-edged sword that can bring additional burden on a citizen’s shoulder if lenders are not closely monitored. An example is the US mortgage fiasco, here we saw not only how it affected the national economy, but the whole world.
Poor management of the US mortgage system and resulting economic crisis made many people stay away from new borrowing.
The Saudi application of the mortgage law and its financing programs must be accompanied by clear bylaws specifying authority and responsibility, a bylaw that criminalizes violations by the financial sector.
The mortgage law in Saudi Arabia is a new law and fears that it can fail are increased by the absence of a proper administrative and judicial infrastructure to administer it.
In light of our experience with the Kingdom’s old mortgage system and the administrative and legal problems homeowners found themselves dealing with, the new mortgage law should include specific key elements.
A bylaw should be passed outlining specific authority, responsibility and penalty. Establish a regulatory body responsible for monitoring and controlling the mortgage system.
Regulate licensed mortgage assessors to protect the rights of all parties involved. Grant loans only to those who are fiscally responsible. Maintain strict monitoring of loan applications. These key elements will go a long way in ensuring the financial and social protection of the country.