Housing Finance

PIDE SLUDGE SERIES NO. 02

Primary Issue The banks are not used to extending mortgage finance – building capacity and introducing efficiency in the process will require bold initiatives, suitable legal framework (enacting and implementing foreclosure law in spirit and training bank staff). Sources of Sludge A major source of sludge is the ‘inspection of the property by the bank – it can around 3 months for the bank officials to physically inspect the property and declare it as ‘clear’ for lending as per the bank’s criteria (the maximum time mentioned in documents obtained from a bank is 12 days). Apart from the inspection, the rest of the processing of the loan application at the bank can take around one month (Again the time mentioned in the documents referred above is 18 days).