Financial crisis could cap lending growth to 15-20%, Millennium Bank says

Romania's lending market could edge up at 15 – 20 bp this year, as the economy is severely dented by the international financial crisis, much slower than the 80% increase anticipated last year, according to deputy general manager of lender Millennium Bank, Dan Sandu, cited by NewsIn.

Representatives of Millennium Bank expect the credit market to recover by year-end following the price reassessment on the real-estate market, as the demand for housing units remains high. 

Liquidity inside the Romanian banking system reduced to around 6-7 banks due to a lack of confidence in the market generated by the financial turmoil. 

An agreement with the International Monetary Fund (IMF) would bring a breeze of trust to market players and would drive liquidity at the level of the entire banking system. 

Millennium Bank Romania estimates to break even in 2011 

“I think we will remain on red in 2011 as well. We should see an operating break-even in 2011, in line with our initial plans, that weren’t very aggressive. However, the margins were too low anyway”, Sandu added.

The bank's losses this year should be smaller compared to 2008, when they totaled 34.9 million euros. The lender is currently revising financial estimates for the year. 

Millennium Bank operates 72 units at present and plans to reach 75 by the end of the month and 100 by the end of 2010. 

Millennium Bank halted non-secured lending 

The lender stopped granting non-secured personal need loans since July 2008, according to Sandu. Non-secured loans for the population currently account for 30 – 40 percent of the credit portfolio for natural persons. 

Millennium Bank targets its credit portfolio 45 percent to the population and 55 percent to legal persons. 

The largest part of credits granted by Millennium Bank are in euros, as interest rates are much smaller for this currency, while loans in lei account for only 12 – 13 percent of the portfolio. 

Shareholders of Millennium Bank Romania hiked the total capital by 285.42 million lei in February by issuing 2,854,200 new shares. The share capital was raised 62.6 percent to 370.46 million lei.

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Foreclosure rescue scams on the rise as economic crisis deepens

As if going into foreclosure isn’t bad enough, homeowners in distress now have something else to worry about: foreclosure rescue scams.  These scams are on the rise as the economy worsens and they target anyone in foreclosure.

“They have a subscription to a foreclosure filing list at the Daly Center and they know every day when a foreclosure has been filed and they mail out letters to anyone who has been foreclosed on,” said Michael Van Zalingen, director of Homeownership Services in Chicago.  “They don’t really care demographically who the person is,” he added.

Victims of these scams typically do not know what they are signing and more often than not end up losing ownership of their homes.  Attorneys in Chicago have seen a rise in clients in this situation.

“The most common is the refinance loan – that what they thought was a refinance loan was actually deeding away their property,” said Shabnam Faruki, an attorney at the Legal Assistance Foundation in Chicago.  “They think they are making monthly payments to a lender, so they are mortgage payments, but what they are actually paying are just rent payments,” she said.

Last year, the Illinois Attorney General’s office received a little more than 2,400 complaints related to residential lending fraud, including predatory loans, or loans made at very high interest rates, and mortgage rescue scams.

“There were really almost no actions a year ago,” Van Zalingen said.

In the past six months, the Illinois Attorney General filed suit against 11 different companies, but Faruki says these cases are not always easy to win.

“It’s often an uphill battle to convince a judge that there was fraud that took places because there are written documents or what looks like a document that two people have signed,” Faruki said.

That puts the onus on distressed homeowners to recognize these scams.  

Experts advise troubled homeowners never to respond to solicitation in the mail and be wary of companies that charge up-front service fees.  

We’ve all heard it a million times, but homeowners would do well to remember that if an offer sounds too good to be true, it probably is.

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