1. Restoration of Mortgage Loaning By Mortgage Fund of Azerbaijan Baku city - 2009

2. YearsAllocated resources 2005 6 2006 20 2007 20 2008 22 200914 Total82 Million AZN Resources allocated from State budget

3. Dynamics of loan allocation

4. IndicatorsAverage Loan amount37 750 AZN Interest rage6,12 % Loan period20 years Monthly annuity276 AZN Area of purchasing DA 68 m 2 Value of purchasing DA51 649 AZN Age limit for borrower35 years old Number of Credits - 1981 Anticipatory payment – annual 1% There are not default cases Average indicators on allocated mortgage loans

5. ConditionsExistence Maximum amount50 000 Maximum period25 years Maximal interest rate8% Initial payment15% Correlation of annuity to income70% Correlation of loan to mortgage85% InsuranceProperty and live Last date of loan repaymentAge limit of pension Men- 62 years old Women -57 years old Conditions on allocation of mortgage loans

6.  Rules on allocation of mortgage loans through resources of Azerbaijan Mortgage Fund under Central Bank of Azerbaijan Republic  Rules on allocation of social mortgage loans in Azerbaijan Republic  Standard Requirement to allocation of mortgage loans by authorized loan organizations which refinancing by Azerbaijan Mortgage Fund under Central Bank of Azerbaijan Republic  Temporary Rules on refinancing of mortgage loans allocated by authorized loan organization through Azerbaijan Mortgage Fund under Central Bank of Azerbaijan Republic 6 Standard Documents regulating Mortgage loaning

7. Additions and changes to Standard Requirements Amendment to Main Agreement Increasing of Fund’s quotation rate Reviewing the list on Market participators Identification of limits on Authorized loan organizations Restoration of initial refinancing mechanism Collecting daily information from banks Restoration of mortgage loaning

8. Conditioning of under-writing Mortgage object should be only mortgage object Obligation of life insurance Existence of special division in banks Technical corrections Additions and changes to Standard Requirements

9. Some requirements regarding borrowers have been conditioned by keeping in force existing conditions, recommendations have been changed to requirements: 1. Considering of borrower’s family expenses and other obligations Purpose – to increase requirements to borrower’s payment ability 2. Requirement on consideration of borrower’s loan history in underwriting 3. Implementing of initial evaluation and underwriting only by ALOs (definition of mortgage agent is extracted) Payments on salary - 154 Monthly family expenses - 4*84=336 Other obligations - min 30 Obligations on mortgage loan - 386 Salary - 906 Total obligations / Official incomes ≤ 100% 906 100%

10. Precising the meaning of near relative (Article 2.12) Increasing the list of required documents (marriage certificate, documents related to family members) Corrections to Loan and mortgage contracts (mortgage object, life insurance, corrections regarding delivery of amount to seller and etc.) Technical corrections

11.  Getting the non-recurrent order for non-accept omission from banks  Indisputable omissioning of relevant amount from correspondent account of bank if bank doesn’t buy back rights on mortgage loan Additions to Main Agreement

12. Quotation rateBeforeExistence Standard Mortgage loans2%4% Social Mortgage loans1% Quotation rate

13. Quotation rate of AMF = 4% 4% Margin Margins of ALO ≤ 4% ≤ 8% 4% Quotation Structure of Interest rate

14.  Confirmation the new list of authorized loan organizations Considered factors: Active participation in loaning Existence of special division and specialized stuff in bank Quality of documentation Service to loans Observance of prudential requirements of loan organization  Selection of authorized loan organizations and evaluators, and approval of Rules on activity assessment and repeated accreditation Repeated reviewing the list of market participators

15. 1. “National Bank of Azerbaijan” OJSC 2. “AtaBank” OJSC 3. “Azerrailwaybank” OJSC 4. “Azerigasbank” OJSC 5. “Standard Bank” CJSC 6.“Bank of Republic” OJSC 7.“Bank of Eurasia” OJSC 8. “Bank of Azerbaijan” OJSC 9.“Ganjabank” OJSC 10.“Capital Bank” OJSC 11.“Mughanbank” OJSC 12.“Pahsabank” OJSC 13. “Unibank” OJSC 14.“Technicabank” OJSC 15.“Turanbank” OJSC 16.“Khalg” Bank OJSC 17.“Zaminbank” OJSC Authorized loan organizations

16.  Defining the requirements for companies  Regulating relations with fund on the basis of contract  Applying quarterly reporting system  Assessment of annual activity  Confirming with Fund forms of evaluation reviews and insurance contracts Rules on selection of authorized insurance companies and evaluators

17. Selecting:  Existence of constant office and experts no less than 3  Experience on evaluating of real estate (1 year work experience and cooperation with more than 3 loan organizations)  Existence of relevant certificate reflecting professionalism level Evaluation:  Correspondence of evaluating report form to agreed form  Assigning the price of mortgage object in accordance to real market prices  Other factors showing professional, transparent and objective activity of independent evaluator  Dynamic activity of company in market (more than 10 evaluation on loans allocated through AMF)  Violation the requirements of cooperation agreements and etc. Main factors on selecting independent evaluating companies and evaluating of activity

18. 1. Azerexpertiza 2. Azintellekt servis 3. Bilender 4. IVC-International Evaluating Center 5. Koneko 6. Marketing Business Analysis 7. MAK Consultancy Baku Ltd 8. REC Invest 9. VES Consultancy Independent Evaluators

19.  Existence of sum capital on the level defined in legislation.  Company’s indicators on collected insurance payments  Organization of work with customs  Implementing insurance payments in insurance cases.  Financial Results.  Other factors. Main factors of insurance company’s activity assessment

20. 1. Azerinsurance 2. Azinsurance 3. Alfainsurance 4. Atainsurance 5. Ateshgah 6. Baku Insurance 7. Bashak-Trust Company 8. International Insurance 9. MBask 10. Pasha insurance 11. Standard Insurance 12. Khalg Insurance Insurance Companies

21.  Initially defining the limit for each authorized loan organization * Main reasons: Indefinite volume of required mortgage loans Management of Fund’s liquidity Limits can be changed (increased-decreased) during loaning process. * Rules on allocation of mortgage loans – “3.3. AMF can define limits to volumes of mortgage loans which will be getting from each bank”. Defining the limits on loan organizations

22. Limit 1 000 000 FR 1 000 000 Authorized Loan Organization Authorized 1 000 000 Allocated Loans 1 000 000 Allocated Loans Limits of AMF

23. Required documents  Quaternary for getting loan;  Evaluation act of mortgage object;  Loan contract;  Document proofing payment of amount to seller Repayment of initial financing amount  Getting the non-recurrent order for non-accept omission from banks  Indisputable omissioning of relevant amount by by Central Bank from correspondent account of bank if bank doesn’t buy back rights on mortgage loan Interest rate on initial refinancing – 8% Period – 120 days Restoration of Initial refinancing mechanism

24. It is necessary to collect following information on daily basis from authorized loan organizations for liquidity management of fund and for prevention arising of displeasures regarding mortgage loans between society: Entered appeals Agreements given by banks Loans allocated by banks Collecting daily information from bank

25. During initial evaluation: Registration (Amendment-2) of applications. Analyze of borrower’s (joint borrower’s) average monthly income and expenses, especially expense on keeping each family members shouldn’t be less than the defined dwelling minimum on country. Loan coefficient L/M (LTV) ≤85%, KO/G (PTİ) ≤70% Delivery of amount to seller correctly and in time. To receive correct and in time annuity payments from borrower and to provide their transfer to AMF. Implementing monitoring of mortgage object with the condition of no less than one time in a year In time signing and prolongation of insurance contracts, especially to change beneficiary person.. Factors to be noticed

26. To give priority to purchasing of flats in new constructed buildings for the purpose of supporting construction sector; Engagement of specially created structural division or relevantly trained specialists with mortgage loans in bank  To increase dynamic of banks and allocate mortgage loans in possible much volume;  More diligent investigation of borrower’s payment ability  To register borrower’s appeal in basis of shifting and investigate attentively  To prevent completely abusive cases of loans Requirements regarding market participators

27. Tel (99412) 5982008 Fax: (99412) 5981177 info@amf.az www.amf.az Mortgage Fund under Central Bank of Azerbaijan Republic Gratitudes