Refinancing

General principles of refinancing

The SRH refinances real estate loan portfolios granted by banks and financial institutions for real estate products, in exchange for collateral deemed acceptable;

The real estate portfolio must be replenished as the original loans are amortized or prepaid;

Although real estate receivables remain on the balance sheets of banks and financial institutions in the case of refinancing with recourse, they are the property of the SRH, which reserves the right to verify their physical existence at any time through on-site or off-site audits;

Banks and financial institutions benefiting from refinancing operations are required to ensure the regular payment of principal and interest, even in the event of a temporary or permanent default by the borrower (this applies, inherently, to refinancing with recourse);

Banks and financial institutions seeking to benefit from “without recourse” refinancing must sign a transfer agreement and a mortgage receivables management contract with the SRH prior to the execution of the refinancing operation. The transfer of ownership rights over the assigned real estate receivables to the SRH is executed in accordance with the legislation in force (the Securitisation Law);

The maximum amortization period for refinanced loans is set at 25 years.

General Terms and Conditions of Refinancing

The approved intermediary must undertake to:

Execute its obligations as defined in the mortgage receivables refinancing agreement;
Periodically submit to the SRH the following documents, upon their approval by the Ordinary General Meeting of Shareholders: the Balance Sheet, the Board of Directors’ management report, and the Statutory Auditors’ report;
Provide all information, financial documents, and any other data deemed necessary for the SRH’s requirements, in accordance with the real estate loan refinancing agreement;
Inform the SRH of any event or factor likely to hinder the execution of the clauses defined in the real estate loan refinancing agreement;
Apply a weighted rate of at least 140% of the remaining duration of the portfolio refinanced by the SRH;
Complete the reporting template (Canevas) containing information related to loans granted to households (this reporting template is available at the SRH).

Required Collateral

Collateral consists primarily of first-priority mortgages on real estate properties, or, failing that, other guarantees deemed acceptable by the SRH;
The mortgage must be officially registered and published with the competent local Land Registry (Conservation Foncière);
The approved intermediary must proceed with the transfer of the first-priority mortgage to the SRH, in compliance with the legislation in force;
The remaining value of the collateral must not be less than 125% of the refinancing amount. Transferred mortgages may be subject to an appraisal conducted by the SRH, or by an independent expert if circumstances require;
Furthermore, as a precautionary measure, if the mortgage value falls below the 125% threshold, the approved intermediary shall transfer additional collateral to the SRH at the end of each quarter. This supplementary collateral must be provided in the form of bonds, Treasury bills, or financial securities.

Special Terms and Conditions

Refinancing is granted for a period equivalent to that of the resources raised on the financial market through the issuance of securities. This period is renewable until final amortization, corresponding to the maturity of the loan granted by the P.I. (Participating Institution);
The refinancing amount is calculated based on the loan-to-value (LTV) ratio, which must not exceed 80% of the value of the mortgages serving as collateral;
The disbursement of funds must be carried out no later than one (1) month after the signing of the refinancing agreement between the SRH and the P.I., in the case of refinancing with recourse;
Fund disbursement conditions are determined jointly with each P.I. For refinancing with recourse, disbursement is executed against a promissory note (acknowledgement of debt) issued by the P.I.;
The refinancing rate is calculated based on the SRH’s average cost of funds, taking into account the most representative securities on the market, plus a margin;
Repayment terms, as well as late payment penalties, management fees, commitment fees, and credit risk, shall be defined in the refinancing agreement;
Refinancing is automatically suspended in the event of non-compliance with contractual clauses;
Cancellation of the refinancing will follow if the suspension reaches a threshold of 30 consecutive days.

Refinancing Procedures

To benefit from SRH refinancing, the approved intermediary must:

Be approved by the SRH and, to this end, submit an application file containing economic and financial information to evaluate the suitability of such approval;
Hold the status of a licensed bank or financial institution in accordance with the legislation and regulations in force;
Maintain a real estate loan portfolio management system deemed satisfactory by the SRH, verified through on-site or off-site audits;
Provide two signatures of authorized officials empowered to legally bind the institution in question;
Allow the SRH to exercise its right to audit the portfolios of refinanced receivables. The SRH may request from the P.I. any additional information and technical assessments it deems necessary for this purpose.

Refinancing Request

The refinancing request must include the following information:

The corporate name and registered office of the P.I.;
Subscribed and paid-up capital;
The desired refinancing amount (the requested amount must not exceed 80% of the value of the collateral provided);
The list of borrowers;
The type of loans to be refinanced;
The requested refinancing duration.

Refinancing Methods

A. Refinancing with Recourse

The refinancing of real estate loan portfolios is granted subject to collateral greater than or equal to 125% of the requested refinancing amount. Refinanced loans are backed by first-priority mortgages, equivalent securities, or guarantees provided by an insurance company;
Although the receivables remain on the P.I.’s balance sheet, they are the property of the SRH, which reserves the right to verify, at any time, their physical existence and their full and unencumbered ownership by the borrowing institution through on-site and/or off-site audits, in accordance with the regulations in force;
The funds are materialized against promissory notes issued by the P.I. to the order of the SRH. These notes must contain the same specifications (amount, duration, rate, etc.) as the bonds issued by the SRH, plus a margin;
Throughout the entire refinancing period, the P.I. must refrain from entering into any transaction involving the refinanced receivables (such as transfer or assignment) prior to their full repayment. The P.I. is also required to replace, at any time, doubtful or disputed receivables with eligible receivables of an equivalent amount;
In the event of a proven default by the P.I. upon the maturity of a promissory note, the SRH reserves the right to declare the acceleration of maturity for all notes issued by the P.I. to the order of the SRH. These notes shall become de facto immediately due and payable;
Upon establishing the P.I.’s default, the SRH reserves the right to employ all legal avenues and remedies to protect its interests, including the enforcement of collateral.

B. Refinancing Without Recourse

The P.I. obtains the requested refinancing of the granted receivables portfolios after transferring, in accordance with the legislation in force, the first-priority mortgages and all other accessory rights securing these refinanced receivables into the name of the SRH;
The P.I. shall enter into a receivables assignment agreement with the SRH prior to the execution of the transfer process;
At the request of the SRH, the P.I. may continue to service the refinanced receivables in exchange for a management fee negotiated between both parties;
The P.I. shall enter into a management and collection agreement with the SRH for the refinanced receivables;
Both the assignment agreement and the management agreement shall be subject to negotiation between the P.I. and the SRH.