Housing Financing Fund to Take Over Mortgages Skip to content

Housing Financing Fund to Take Over Mortgages

Agreements are in the final stages between the state-run Housing Financing Fund (HFF) and the savings banks of the Reykjavík area, SPRON, and Keflavík, SPKef, on the fund’s takeover of SPRON’s and SPKef’s domestic mortgages.

The SPRON mortgages in question are worth ISK 20 billion (USD 156 million, EUR 118 million) and the SPKef mortgages ISK 15 billion (USD 117 million, EUR 87 million), Morgunbladid reports.

According to CEO of HFF Gudmundur Bjarnason, the fund will acquire the mortgages from the savings banks on a discount price. “We will make a special agreement with everyone involved on the terms under which we will buy the mortgages,” he added.

Two other savings banks have also requested discussions with HFF on taking over their mortgages, but none of the three large commercial banks that have now been nationalized have requested such discussions. The HFF will not take over mortgages in foreign currencies for the time being.

The number of apartments that the HFF has become in ownership of because of forced auction increased considerably last year. At the beginning of 2008, the fund was in ownership of 54 such apartment, but at the end of the year they had become 205.

The number of individuals in default increased rapidly in 2008 and that development had begun before the collapse of the country’s banking system in October. Their number has increased from 16,000 to 18,000 in a short period of time and that development is expected to continue.

Iceland is the only Nordic country that doesn’t have legislation on debt or payment adjustment. Proposals for such legislation is expected to be submitted to the Althingi parliament shortly, aimed at making repayment easier for individuals who are heavily indebted.

Click here to read more about default claims in Iceland piling up.

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