Based on Capital Market Authority Law No. (13)
of 2004, the PCMA carries out the supervision and oversight of the mortgage
finance sector, stemming from its primary objective of creating a suitable
environment to achieve capital stability and growth, and to protect investors’
rights, by preparing the legislative framework regulating the work of the
mortgage finance sector, including real estate appraisers.
Banks dominate the primary market (which
involves direct loan grants to citizens) in the mortgage finance sector due to
the high liquidity enjoyed by the Palestinian banking sector, the low cost of
deposits (the banks’ main funding source), and their wide presence across many
branches. This situation poses a challenge for mortgage finance companies to compete
and operate within the direct (primary) market of the mortgage finance sector.
As for the secondary market (refinancing
operations of loan portfolios granted by banks to citizens) in the mortgage
finance sector, Palestine Mortgage and Housing Corporation continues to operate
in the market through its financing arm, the Palestine Housing Finance Corporation,
which has had a significant impact on the expansion and growth of the mortgage
finance market by refinancing mortgage loan portfolios for banks. However, due
to the availability of liquidity in banks, the provision of financing
facilities, and the increase in informal activity in the real estate financing
field, the secondary market activity represented by Palestine Mortgage and
Housing Corporation’s refinancing of mortgage loans has declined.
As for real
estate appraisal, given the importance of this profession in determining the
value of property collateral on which loans are granted, the ratio of the
property’s value to the loan amount is considered one of the prudential policy
tools used to maintain the stability of the mortgage market. Therefore, the
more accurate and realistic the appraised value of the property is, the more it
contributes to achieving the goal of stabilizing the mortgage market, ensuring
that the financed property values closely reflect reality in the event of
borrower default and the banks’ need to foreclose on these properties to
recover their funds.
