Act XXX of 1997
on Mortgage Loan Companies and on Mortgage Bonds
In order to improve facilities for the extension of long-term loans required for economic growth, Parliament hereby
passes the following Act:
SCOPE OF THE ACT
The provisions of this Act shall apply to mortgage loan companies founded and operating in the territory of the
Republic of Hungary, and to mortgage bonds.
MORTGAGE LOAN COMPANIES
Foundation of Mortgage Loan Companies
(1) Mortgage loan companies are specialized credit institutions.
(2) Foundation, operation, and supervision of mortgage loan companies shall be subject to the provisions of Act
CXII of 1996 on Credit Institutions and Financial Enterprises (hereinafter referred to as ‘CIFE’), and investment
services and auxiliary investment services of mortgage loan companies shall be subject to the provisions of Act CXX
of 2001 on the Capital Market (hereinafter referred to as ‘CMA’) with the discrepancies set forth in this Act.
(3) Mortgage loan companies may be founded with a subscribed capital of at least three billion forints, to be paid
up in money.
(4) The ownership interest of the Hungarian State in the subscribed capital of a mortgage loan company may
exceed the percentage defined in Subsection (1) of Section 12 of CIFE.
(5) Mortgage loan companies are not required to join National Deposit Insurance Fund.
Concept and Scope of Activities of Mortgage Loan Companies
(1) Mortgage loan companies grant financial loans secured by mortgages, including if filed in the form of
independent lien (hereinafter jointly referred to as "mortgage") on real estate located in the territory of the Republic
of Hungary, the sources for which they procure by way of issuing mortgage bonds.
(2) Mortgage loan companies shall perform exclusively the following financial service, investment service, and
complementary investment service activities:
a) accepting repayment funds from the public, not including the collection of deposits;
b) extending financial loans covered by mortgages on real estate located in the territory of Hungary (hereinafter:
c) extending loans without stipulating a mortgage, if cash surety is assumed by the State;
d) assuming suretyship and bank guarantee, and assuming other banker’s obligations (hereinafter referred to
collectively as "banker’s obligations");
e) safe custody services;
f) performing securities custody connected with self-issued securities, and rendering services connected therewith;
g) performing securities safekeeping in respect of self-issued securities;
h) keeping securities accounts in respect of self-issued securities;
i) keeping client accounts in respect of self-issued securities;
j) organizing the offering of self-issued mortgage bonds, debentures, and certificates of deposit, and rendering
services connected therewith.
(3) If, in connection with a mortgage loan, another loan is simultaneously provided under Government guarantees
(this loan hereinafter referred to as “follow-up loan”), the provisions contained in Subsection (1) of Section 5,
Section 6, Section 7 and Subsections (3)-(4) of Section 8 pertaining to mortgage loans shall apply to the entire loan
amount, with the exception that the mortgage shall not cover the follow-up loan.
(4) Mortgage loan companies may not assume an obligation to repurchase debentures and certificates of deposit
prior to the expiration of such.
(5) Apart from the financial and investment activities and activities auxiliary to investment intermediation defined
in Subsection (2), mortgage loan companies may only engage in appraisal services to determine the collateral value
of real properties for credit institutions and insurance companies.
(6) Mortgage loan companies are permitted to engage in derivative transactions for reasons of liquidity and risk
management operations and only for hedging purposes.
(1) Mortgage loan companies may assume banker’s obligations only under stipulation of a security on real estate
and solely to clients to whom (which) they have extended a mortgage loan.
(2) The total amount of mortgage loans and banker’s obligations may not exceed seventy per cent of the loan
security value, as per Subsection (3) of Section 5, of the real estate mortgaged as a security.
(3) Mortgage loan companies may provide safe custody services to customers to whom they have provided a
(1) The ratio of mortgage loans with a maturity of not less than five years may not amount to less than eighty per
cent of the total loan portfolio at the time of concluding loan contracts.
(2) For the transfer or encumbrance of a property on which a mortgage loan company has a mortgage (independent
lien), the mortgage loan companyis required as of the time the mortgage loan company the mortgage independent lien
until it is terminated.The restraint of alienation and encumbrance of the property shall be automatically registered in
the real estate register on behalf the mortgage company concurrently with the mortgage (independent lien); however,
if it is not registered it may not be enforced vis-à-vis a third party acquiring any right in the property in good faith.
(3) The value of the principle claims portfolio arising from mortgage loans may not exceed seventy per cent of
total value of the real estate serving as a security on which the loan was granted (hereinafter: loan security value).
(4) Methodological principles of determining loan security value shall be defined in a legal regulation. Based on
such, the mortgage loan company shall prepare regulations for determining loan security value which shall be
approved by the State Financial and Capital Market Supervisory Commission (hereinafter referred to as "Supervisory
(5) Mortgage loan companies may use the data received from the duties office, with the exception of the personal
data of the persons subject to pay duties, which is necessary for establishing loan security in connection with the sale
of real properties in observation of the provisions of Act CXII of 1996 on Credit Institutions and Financial
Enterprises pertaining to bank secrets. A special fee shall be payable to the duties offices for the provision of such
(6) In the event the condition or loan security value of the mortgaged property permanently deteriorates, but such
deterioration is not due to the actions of the owner, the mortgage loan company may enforce its right to withdraw the
mortgage loan with immediate effect only to the extent of the amount for which the decreased value of the mortgaged
property no longer provides the security as per the contract, if the debtor fails to restore the condition within the time
limit set by the mortgage loan company or fails to provide further security.
(7) The land title office shall process applications of mortgage loan companies for the registration of mortgages
and restraint of alienation and encumbrance within eight (8) days.
Mortgage loan contracts concluded by mortgage loan companies shall be made in public documents.
Mortgage loan companies may stipulate in the mortgage loan contract that the mortgage loan may not be repaid
prior to its expiration. If the loan is repaid before maturity the mortgage loan company shall be entitled to charge for
any profits lost in consequence.
(1) Mortgage loan companies may only purchase, advance (including factoring and forfeiting), and discount
mortgage loans and follow-up loans (hereinafter referred to collectively as “purchase of mortgage loans”).
(2) Mortgage loan companies may purchase any mortgage loan and follow-up loan from credit institutions and
a) that is secured by mortgage on a real property located in the territory of Hungary restraint o alienation and
encumbrance relating to mortgage loans, or - in connection with the of a mortgage or independent lien for additional
security - a contractual clause that a restraint of alienation and encumbrance is registered on behalf of the mortgage
loan company on the mortgaged property, or that is provided under the provisions contained in Subsection (3) of
Section 3 relating to follow-up loans, and
b) there are at least five years remaining until maturity at the time when purchased, and
c) is rated problem-free by the auditor of the seller credit institution or insurance company, and
d) the collateral value of the mortgaged real property was established by the mortgage loan company under the
relevant regulations, and the principal of the mortgage loan does not exceed seventy per cent of the collateral value,
or the principal and interest of the follow-up loan does not exceed the amount to which the Government guarantee
e) if the mortgage loan contract is fixed in a document witnessed and sealed by a notary public.
(3) Unless otherwise stipulated by parties in the mortgage transfer contract, all rights attained by the seller credit
institution under the contractual relationship on which the mortgage is based and secured shall be transferred to the
buyer mortgage company at the time of purchase.
(4) Mortgage loan companies may purchase independent liens from credit institutions and which are filed on real
properties located in the territory of Hungary, and
a) the lien is filed in security of a mortgage loan that satisfies all criteria stipulated in Subsection (2), and
b) if the lien contract is witnessed and sealed by a notary public, and
c) if the lien is repurchased in installments by the credit institution at the time of sale on condition that mortgage is
transferred only when the purchase price is paid up in full (upon payment of the last installment).
(5) Any receivable of the mortgage loan company under Paragraph c) of Subsection (4) (hereinafter referred to as
“repurchase price”) must not exceed the amount of claim remaining from the mortgage secured by independent lien
and from the follow-up loan,
(6) In the event of default in the payment obligation stipulated under the repurchase agreement, the mortgage
secured by the independent lien and the follow-up loan shall become the property of the mortgage loan company
effective as of the date of default and subject to the legal consequences defined in Subsection (3). Consequently, the
mortgage loan company shall be deemed the legitimate assignee and shall have the privilege to notify the obligor by
virtue of the assignor’s notification obligation [Subsection (4) of Section 328 of the Civil Code]. In this case, when
settling accounts with the credit institution, the mortgage loan company shall be liable to pay the fraction of the
repurchase price that is in excess of the combined total of all installments paid up and the mortgage loan company’s
receivables from the mortgage loan.
Restrictions on Investments
(1) With the exception of other credit institutions, insurance companies limited by shares, investment enterprises,
and complementary enterprises, mortgage loan companies may only acquire or maintain direct or indirect ownership
interests in economic associations which pursue exclusively activities associated with the management, utilization,
and sale of real estate, acquired according to Subsection (2) of Section 10.
(2) Total investments acquired in an economic association, subject to the restriction of activities, as defined in
Subsection (1), may not exceed ten per cent of the mortgage loan company’s guarantee capital.
(3) When applying the restriction specified in Subsection (2), ownership interests, which have been taken into
possession by the mortgage loan company only temporarily, for a period of not more than three years from the date of
such acquisition, as a result of liquidation or execution, and which are registered and managed separately, and subject
to regular valuation, shall not be taken into account.
Restrictions on Real Estate Investments
(1) A mortgage loan company’s total investments in real estate may not exceed five per cent of its guarantee
capital, not including real estate directly serving bank operation purposes, acquired on the basis of the provisions of
(2) Other than real estate directly serving bank operation purposes, mortgage loan companies may acquire real
estate only in course of
a) credit-real estate swap transactions concluded in order to mitigate or avoid losses arising from financial services,
as well as
b) liquidation or execution proceedings initiated against their debtors.
(3) Real estate acquired in the manner described in Subsection (2) shall be sold within three years by public
Method and Conditions of Mortgage Bonds Issues
(1) Mortgage bonds are registered transferable securities that can be issued only by mortgage loan companies in
accordance with this Act.
(2) Mortgage bonds shall be regulated by the legislation on bonds, and the offering of mortgage bonds shall be
regulated by the provisions of the CMA, with the deviations set forth in this Act.
(3) Mortgage bonds shall indicate:
a) designation of the mortgage bond;
b) name and company-authorized signature of the issuer;
c) type of the mortgage bond (bearer or registered);
d) in the case of registered mortgage bonds, name of the holder of the mortgage bond;
e) letter symbol of series of the mortgage bond, and code and serial numbers of the mortgage bond;
f) nominal value of the mortgage bond;
g) interest rate, manner of computation of interest;
h) in the case of variable interest rate:
ha) initial interest rate,
hb) principles of alteration of interest rate,
hc) mode of computation of interest rate;
i) expiration date of the mortgage bond;
j) dates and amount of interest payments and redemption (repayment);
k) restrictions, if any, relating to transfer;
l) total nominal value of issued series;
m) date and place of issue of the mortgage bond;
n) certificate of property supervisor regarding existence of collateral security according to regulations, and entry of
such into the collateral security register.
(4) An instrument which lacks any of the requisites defined in Subsection (3) shall not be qualified as a mortgage
(1) In one series only such mortgage bonds may be issued which constitute identical rights and have identical
nominal value. Mortgage bonds belonging to the same series shall be furnished with continuous serial numbering, and
shall be issued in identical format. Mortgage bonds, issued in the same series, may be issued also in consolidated
(2) For installments of interest payment and repayment stipulated in printed mortgage bonds, interest and principal
repayment coupons shall be issued.
(1) In connection with the public offering of mortgage bonds the condition stipulated in Subsection (3) of Section
23 of the CMA shall not apply.
(2) Concerning the issue of mortgage bonds, the prospectus shall also contain, above and beyond the provisions of
the CMA, the value of ordinary security and collateral security, serving as a basis for such issue.
(3) Repurchased mortgage bonds may not be placed back into circulation. These mortgage bonds are considered
withdrawn from circulation and as such, are not required to be covered by the mortgage loan company.
Security for Mortgage Bonds
(1) Mortgage loan companies shall at all times have sufficient funding secured to cover the face value and interest
of outstanding mortgage bonds in circulation. Security may comprise ordinary security and collateral security.
(2) Mortgage loan companies shall comply with the requirements set out in Subsection (1) as set out below:
a) the amount of the combined total of outstanding principal claims applied as security, less any value adjustments,
must be more than 100 per cent of the amount of the face value of the outstanding mortgage bonds in circulation;
b) the amount of the combined total of interests on outstanding principal claims applied as security, less any value
adjustments, must be more than 100 per cent of the amount of interest on the face value of the outstanding mortgage
bonds in circulation.
(3) Principal claims arising from mortgage loans, and interest due under the contract, and service charges that may
applied according to the loan contract in a specific percentage of the outstanding principal for the life of the contract
(hereinafter referred to as “interest and similar income”) may be taken into account as ordinary security, if the
mortgage and the restraint on alienation and encumbrance is registered in the real estate register. The repurchase
price and the amount of principal from the follow-up loan, and interest due and other similar income under the
contract may also be accepted as ordinary security.
(4) The amount of security for mortgage bonds shall be calculated and provided at all times at current prices.
(5) Where any mortgage bond and its cover are not denominated in the same currency, the mortgage loan company
shall enter into derivative transactions to reduce currency exchange risks.
(6) Where a mortgage loan company enters into derivative transactions affecting its mortgage bonds and their
security, such derivative transactions may also be applied in accordance with the relevant provisions of specific other
legislation to comprise part of the security these mortgage bonds.
(7) If the amount of a principal claim arising from a mortgage loan or the repurchase price exceeds sixty per cent
of the loan security value of the real estate offered as security, it may be taken into account as ordinary security up to
maximum sixty per cent.
(8) The share of ordinary security in total security may not be less than eighty per cent.
(9) The share defined in Subsection (5) shall be achieved by the mortgage loan company by the third calendar year
of its operation.
(10) The share of ordinary security within the mortgage bond security of may not be less than sixty per cent in the
first year of operation of the mortgage bond company, and seventy per cent in the second year thereof.
(11) Collateral security serves to complement ordinary security and may consist of the following assets:
a) money held on a separate blocked account at National Bank of Hungary;
b) government securities;
c) securities issued with cash surety by the government;
d) loans provided under Government guarantees, other than what is defined in Subsection (3) of Section 3.
(12) Mortgage loan companies shall immediately notify the Supervisory Commission if
a) the security for mortgage bonds in circulation does not meet the requirements set forth in Subsection (1);
b) the share of ordinary security in total security falls under eighty per cent.
(13) Mortgage loan companies shall keep a register of mortgaged properties providing ordinary security for
mortgage bonds, and of the values of ordinary security and collateral security, in which each individual security is
(14) Mortgage loan companies shall prepare regulations for making entries into the security register, which shall be
approved by the Supervisory Commission.
Transfer of Obligations Arising from Mortgage Bonds
(1) In the event of the transformation or liquidation of a mortgage loan company, such company may, with the
permission of the Supervisory Commission, transfer its obligations arising from mortgage bonds to another mortgage
(2) In the case of transfer of obligations arising from mortgage bonds, the provisions of Act IV of 1959 on the
Civil Code of the Republic of Hungary (hereinafter referred to as "Civil Code") shall be applied, with the deviation
that the transfer shall not be subject to the consent of the holder of the mortgage bond. By such transfer, obligations
arising from the mortgage bond shall, starting from the date of receipt of the permit, accrue to the mortgage loan
company which accepts the bond.
(3) Application for the transfer permit shall contain at least the following:
a) a legal declaration by the transferor and the transferee regarding the granting and accepting of the transfer;
b) the outstanding nominal value and interest of the obligation arising from the mortgage bonds to be transferred;
c) itemized designation of each individual security for mortgage bonds to be transferred with an indication of the
loan security value of real estate mortgaged as security;
d) countervalue and date of the transfer;
e) certification that the party accepting the transfer has, in addition to the minimum guarantee capital pertaining to
obligations arising from his own mortgage bonds, the minimum guarantee capital required for fulfillment of
obligations arising from the mortgage bond to be accepted, or the security required for fulfillment of obligations
arising from the mortgage bonds.
(4) The Supervisory Commission may reject approval of the transfer if such jeopardizes fulfillment of obligations
arising from the mortgage bonds affected by the transfer.
(5) Obligations arising from mortgage bonds may only be transferred if the ordinary security and collateral
pertaining to such are concurrently transferred.
(6) The mortgage loan company accepting the portfolio shall offer new mortgage bonds on the original terms and
conditions defined by the mortgage loan company transferring the same.
(7) The mortgage loan company accepting the portfolio shall, within thirty days of receipt of the decision for
approval, publish an announcement upon accepting of the portfolio and cancellation of mortgage bonds offered by
the mortgage bond company transferring the same in a national daily newspaper and in the Exchange Journal.
Appointment of Property Supervisor
(1) Mortgage loan companies shall appoint a property supervisor to fulfill the tasks set forth in Section 17. Validity
of appointment of the property supervisor shall be subject to approval by the Supervisory Commission.
(2) Only a public accounting firm or a natural person may be appointed as a property supervisor.
(3) Only public accounting firms, which comply with the requirements defined in Subsection (1) of Section 133 of
CIFE, and which do not perform any other auditing tasks for the mortgage loan company, may be entrusted with the
tasks of a property supervisor.
(4) Only natural persons, who have
a) no prior criminal record,
b) specialized higher qualification, and
c) professional liability insurance,
may be appointed as property supervisors.
(5) The specialized higher qualification set forth in Paragraph b) of Subsection (4) shall be a university or college
diploma certifying qualification in law, administration, finances and accounting or a technical field.
(6) Any person, who
a) is the founder, shareholder, senior executive, supervisory board member, auditor of a mortgage loan company,
or the close relative thereof [Paragraph b) of Section 685 of the Civil Code], or an employee of the mortgage loan
b) has terminated such status listed in Paragraph a) within less than two years;
c) has a direct ownership interest in a mortgage loan company;
d) carries on business relations with the mortgage loan company or with the persons defined in Paragraph a) or is
employed by a person holding a controlling interest in the mortgage loan company;
e) owes any debt, upon any grounds, to the mortgage loan company,
may not be a property supervisor.
(7) A property supervisor may be appointed for a fixed period of time, not to exceed five years; however, he may
be re-appointed after expiration of the period of his appointment. The contract of appointment concluded between the
mortgage loan company and the property supervisor may not be validly terminated without the approval of the
(8) Within the scope of his property supervision activities, a property supervisor may not be instructed by his
(9) A property supervisor may at any time inspect books and other files of the mortgage loan company which
contain data necessary for performance of his tasks, and may solicit information in connection with performance of
his tasks. Even in the absence of such request, the mortgage loan company is required to keep the property supervisor
informed regarding principal and interest repayments on mortgage loans entered into the security register, as well as
regarding any changes affecting the mortgaged properties and collateral.
(10) Except the case defined in Subsection (2) of Section 17, the property supervisor shall be obliged to maintain
confidentiality in respect of the facts, data, and business information which he becomes aware of in course of his
(11) When fulfilling his obligations as regulated by law, the property supervisor shall act with due diligence
expectable from a person performing such tasks, and otherwise his responsibility shall be governed by general rules
of responsibility under civil law.
Scope of Activities, Obligations of Property Supervisors
(1) Property supervisors shall, in accordance with the provisions of Paragraph n) of Subsection (3) of Section 11,
and Subsection (1) of Section 18, continually monitor, and certify:
a) whether the security for mortgage bonds is available at all times according to regulations;
b) the entry of mortgaged properties providing ordinary security for mortgage bonds, of the real estate register data
and loan security value of such, and of ordinary security and collateral into the security register.
(2) Property supervisors shall, without delay, notify the Supervisory Commission in writing if the security for
mortgage bonds in circulation fails to meet the requirements set forth in Subsection (1) of Section 14.
(3) Data relating to the mortgaged properties entered into the security register, as well as that relating to ordinary
security and collateral may only be deleted with the written approval of the property supervisor.
(1) Mortgage loan companies shall make known the amount of nominal value and interest of outstanding mortgage
bonds in circulation defined as of the last day of the subject quarter, as well as the value of security, certified by the
property supervisor, to the Supervisory Commission after each calendar quarter according to the supervision
regulations, and shall, following such, publish the same in a national daily newspaper and in the Exchange Journal on
or before the last day of the month.
(2) The publication and the announcement relating to the security shall contain
a) value of the ordinary security, and
b) values of collateral security, itemized according to Subsection (8) of Section 14.
In addition to the content requirements specified in the CMA, the annual report of mortgage loan companies shall
contain also the following:
a) the security values for mortgage bonds in circulation as of 31 December, with an itemized listing of collateral
b) number of foreclosure sales which have been initiated at the request of the mortgage loan company, and, in the
case of such completed sales, the difference in the value between the result of sale and the mortgage loan existing at
c) number, legal character, and classification in line of cultivation of real estate received in order to mitigate or
avoid losses connected with extension of mortgage loans or as a consequence of liquidation or execution;
d) the amount of mortgage loan repayment installments.
RULES APPLICABLE FOR INSOLVENCY
Liquidation of Mortgage Loan Companies
(1) In the course of liquidation proceedings against a mortgage loan company, rules relating to the liquidation of
credit institutions shall be applied with the deviations set forth in Subsections (2)-(3).
(2) In the case of liquidation of a mortgage loan company, following settlement of liquidation expenses,
a) ordinary security and collateral entered into the security register, and
b) the part of assets, in particular liquid assets of the mortgage loan company which serve for the purpose of
supplementing the part of claims, accrued on the basis of mortgage bonds, not secured by the securities as per
may be used solely for the satisfaction of obligations to holders of mortgage bonds.
(3) If the total assets of the mortgage loan company are not sufficient to cover the claims arising from the mortgage
bonds, holders of the mortgage bonds shall be satisfied pro rata according to their claims.
Execution Proceedings against Mortgage Loan Companies
(1) In the course of execution proceedings against a mortgage loan company, Act LIII of 1994 on Execution by
Court shall be applied with the deviations set forth in Subsections (2)-(3).
(2) In respect of assets of a mortgage loan company, as defined in Subsection (2) of Section 20, only holders of
mortgage bonds may conduct execution, up to the amount of their claims.
(3) Obligations towards holders of mortgage bonds shall be satisfied following the settlement of execution
MEANS OF PERFORMANCE OF SUPERVISION
Special Supervision of Mortgage Loan Companies
Above and beyond the provisions of CIFE and the CMA, the Commission shall exercise special supervision of
mortgage loan companies. Within the framework of such special supervision, the Commission shall draw up an
inspection scheme based on which to perform comprehensive on-site inspections of mortgage loan companies
annually or more frequently.
Measures and Extraordinary Measures
Above and beyond the provisions of CIFE and the CMA, the Commission may take the following measures and
a) it may order restoration of security, if the amount of nominal value and interest of outstanding mortgage bonds
in circulation exceeds the amount of the security, and set a time limit for such action. Security may be restored by
involving collateral, by placement of further mortgage loans, or by repurchasing mortgage bonds;
b) it may require the mortgage loan company to transfer claims arising from mortgage bonds and the portfolio of
mortgage loans representing security - including receivables from repurchase prices (hereinafter jointly referred to as
"portfolio of mortgage loans") -, as well as the collateral, if its capital adequacy index is, for more than 90 days, less
than four per cent, and such cannot be restored within the time limit stipulated by the Supervisory Commission. If
claims arising from mortgage bonds, portfolio of mortgage loans and collateral may not be transferred to other
mortgage loan companies, they may also be taken over by a bank, subject to the approval of the Supervisory
(1) Above and beyond the provisions of CIFE and the CMA, the Commission may also impose fines in the
a) the mortgage loan company fails to comply with its obligation to make announcement set forth in Subsection (9)
of Section 14, and its disclosure obligation set forth in Sections 18 and 19, or fails to comply with such in accordance
with the law;
b) the mortgage loan company hinders the property supervisor in the performance of his activities;
c) the property supervisor violates his obligations as defined in Section 17;
d) the mortgage loan company violates the principle of security set forth in Subsection (1) of Section 14;
e) the mortgage loan company fails to observe the ratio set forth in Subsection (5) of Section 14.
(2) The amount of the fine
a) shall be not more than twenty million forints in the case defined in Paragraph a) of Subsection (1);
b) shall be not more than ten million forints in the case defined in Paragraph b) of Subsection (1);
c) may range from five hundred thousand forints to one million forints in the case defined in Paragraph c) of
d) shall be not more than thirty million forints in the case defined in Paragraph d) of Subsection (1);
e) shall be not more than twenty million forints in the case defined in Paragraph e) of Subsection (1);
(3) The fine may be imposed repeatedly.
(4) The Supervisory Commission shall appropriate the total revenues from fines imposed on mortgage loan
companies for the purposes listed in Subsection (5) of Section 139 of CIFE.
Protection of Denomination
(1) In company names or for business and advertising purposes, the denomination "mortgage loan company" or
compositions, attributive constructions, as well as synonymous forms or foreign equivalents thereof may be used
exclusively by specialized credit institutions which have been founded and operate in accordance with the provisions
of this Act
(2) The denomination "mortgage bond" or any other denomination, which may create the appearance that certain
securities or documents are mortgage bonds, may be borne by no securities or documents other than the securities
defined in this Act.
(3) In the case of any dispute, the Supervisory Commission shall render a decision on the use of the denomination.
Regulations on Mortgage Loan Companies Operating as Branch Offices
(1) Mortgage loan companies operating as branch offices may only be established by foreign credit institutions
authorized to issue mortgage bonds. For the purposes of this provision, the securities issued by the following
conditions shall be regarded as mortgage bonds:
a) issued by a credit institution subject to special supervision;
b) in the event of bankruptcy of the issuing credit institution, the mortgage bond holders are granted priority of
c) security is provided by a mortgage loan or by a loan to the public sector;
d) strict laws are enacted for the protection of securities holders.
(2) In respect of mortgage loan companies operating as branch offices, the provisions of
a) Subsections (1) and (3) of Section 5,
b) Subsection (2) of Section 9,
c) Subsection (1) of Section 10,
d) Subsection (1) of Section 14
shall be observed separately on the basis of accounting and other records, apart from the foreign credit institution.
(3) Mortgage loan companies operating as branch offices may not acquire ownership in arable land.
(1) This Act shall enter into effect on the 30th day following its promulgation.
(2) In the interest of approximation with the legislation of the European Communities and on the basis Act 1 of
1994 promulgating the European Agreement on the establishment of associated status between the Republic of
Hungary and the European Communities and its member states, signed on 16 December 1991 in Brussels, the
principles set forth in Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions
relating to undertakings for collective investment in transferable securities were taken into account in this Act.
(1) An authorization shall be granted to
a) to the Minister of Agriculture, in respect of arable lands,
b) to the Minister of Finance, in respect of real estate other than arable lands,
to establish in a decree the methodological principles of determination of loan security valuesof such property.
(2) The Minister of Finance is hereby authorized to decree
a) the detailed regulations for keeping records on derivative instruments and for applying them as security,
b) the rules for current value calculation in connection with mortgage bond security.