SAMA issues new directives to banks, home financiers on retail loans

The Saudi Arabian Monetary Authority (SAMA), the Kingdom’s central bank, issued new mandatory directives to banks, and home financiers operating in the Kingdom on providing retail mortgage loans.

Under the new directives, SAMA has instructed home financiers to thoroughly study client information and ensure their ability to meet obligations under mortgage agreements, SAMA said in a statement on Sunday.

The financiers may not offer mortgage loans unless the results of that study comply with the policies adopted by the financier and the central bank.

Clients will be provided with full explanation about the proposed financing product, including the loan terms, risks and obligations.

The mortgage offers are required to valid for a minimum of 15 days from the date they are provided for clients.

Offers will include a clear print that indicates all data required, the mortgage loan contract, and risk acknowledgement forms for all variable-cost products, the statement added.

The new directives are aimed to help customers make the right decision when applying for mortgage finance. It also aims at protecting the rights of real estate financing parties.