Chapter IV: Activities of Real Estate Refinance Companies
No: 43083271 Date(g): 26/4/2022 | Date(h): 25/9/1443 Status: In-Force Article 14
The Company and its employees shall maintain the confidentiality of the data of borrowers, and in particular:
1. The Company and its employees shall not disclose the personal or credit data and information of any borrower, whether directly or indirectly, unless such disclosure was made pursuant to their express written consent, a judgement of a competent court of law or any legal instance. The clause shall survive the expiry of the relationship.
2. Any person who has accessed information due to the nature of their profession or job or during the course of their work, whether directly or indirectly, shall maintain the confidentiality of the data and information related to borrowers. This includes charted accountants and consultants appointed by SAMA or the Company.
3. The provisions of Paragraphs (1) and (2) above shall exclude the requirements of auditing and inspection carried out by SAMA or for the purpose of exchanging credit information or proving the right of a client in a legal dispute.
Article 15
1. The Company shall issue a policy approved by the board for the acceptance of real estate financiers
2. The Company shall issue a policy approved by the board for the acceptance criteria for real estate contracts to be acquired by such real estate financiers, in line with the strategy of the Company and its approved risk limits. Such policies shall be reviewed and updated periodically.
3. The Company shall have the right to grant direct financing to the real estate financier if the financier confirms meeting the conditions prescribed by the policy mentioned in Paragraph (1) of this Article.
Article 16
1. In accordance with the policy and procedures of risk management, approved by the company board, the finance must be by collaterals. Only collaterals that can be evaluated and are clear in the execution procedures shall be accepted.
2. Due diligence shall be implemented before purchasing loans to ensure economic feasibility from such loans and the adequate review of risks.
3. The Company shall undertake due diligence to confirm that the real estate financier has made necessary arrangements in case the value of the collaterals is substantially affected by the financial position of others or by market fluctuations and conditions. Such collaterals must be evaluated periodically by the real estate financier.
4. The Company, when providing finance, may require the real estate financer to replace the collaterals provided or provide additional qualified collaterals to compensate for any reduction in the market value or the book value of the collaterals provided.
Article 17
1. The Company shall keep all work documents, records and files in an orderly, transparent and safe manner and ensure that all files are complete and updated regularly, for a period of at least 10 years from the date of the end of the relationship with the relevant parties.
2. The Company shall ensure that the collateral is present and keep it in a safe place once the finance purchase is completed. Additionally, the Company may assign such task to a third party after obtaining a no-objection letter from SAMA.
Article 18
The Company shall take due diligence when providing its services, including without limitation:
a. Real estate financier’s credit risk.
b. Finance management services.
c. Collateral management.
d. Owned real estate management.
e. Accounting systems efficiency.
Article 19
The Company shall develop a policy to specify the minimum requirements for contracting with real estate financiers. Such policy must include at least the following:
1. Requirements for acceptance of a real estate financier to grant financing to borrowers.
2. The minimum content of contracts concluded with real estate financiers, which should include the qualified collaterals, duties of the real estate financier, rights of the Company in revision and disclosure, rights of access, and consequences of breaching contracts.
3. Requirements of finance contract documents.
4. Criteria for granting financing to borrowers, including criteria to assess creditworthiness and procedures to deal with declining credit rating during the contract term.
5. Criteria of collaterals accepted from borrowers.
6. Criteria for monitoring, management and enforcement of collaterals and risk provisions.
7. Loan seasoning requirements.
8. Credit exposure limits to ensure liquidity and financial adequacy in case of availability.
9. Review of the criteria and minimum requirements for collaterals to be provided by the real estate financer.
10. Required reporting by real estate financers, including cash balance reporting, default and imminent default warnings and reporting, and reporting on breaches and risks.
11. Management of non-performing loans.
Article 20
1. The Company shall clarify the cases where it has the right to recourse against the real estate financier. Such cases must include:
a. Errors and omissions that lead to the financing being materially different from that agreed upon in the contract.
b. Fraudulent cases, such as directly or indirectly obtaining a form of financial benefit or making the same easy for others to obtain, causing the Company to incur any kind of losses.
2. The Company shall develop a supervisory program and procedures to randomly evaluate purchased loans in order to ensure that there are no errors, omissions, or fraud.
Article 21
1. The Company shall supervise the levels of exposures continuously to ensure conformity with the risk limits of the company.
2. The Company shall not exceed the legal exposure limits as determined by SAMA.
3. The Company shall report to SAMA immediately in the event it exceeds the legal exposure limits and provide a clear remedial plan to reduce such exposure.
Article 22
1. The Company shall ensure that the real estate financier adopts sound methods as well as clear and transparent written criteria and procedures for assessment of creditworthiness of finance applicants and their ability to repay in accordance with the best practices followed in this regard.
2. The Company shall have the right to prevent or restrict purchase of loans from any real estate financier in case such financer does not adopt clear, transparent and documented scientific methods, criteria and procedures to assess the creditworthiness of borrowers.