The Knesset Economics Committee has approved for its first reading a law that would require banks to allow individuals who are unemployed, ill, or on maternity or paternity leave to hold off on payments of their mortgages. The rule would kick in if the head of the household or a significant contributor to family income was unable to earn a salary for at least three months.
The law would enable banks to offer customers applying for a mortgage a rider that would kick in if the required circumstances presented themselves. Each postponement would allow mortgage holders to withhold payment for a period of three months (unless the customer required a shorter postponement period) in every 12-month period. Customers could get up to three postponements altogether over three years.
Banks could charge interest for the postponement, which would be compounded into the balance of the mortgage, but they would have to ensure that customers were aware of this. The repayment of the principal could be factored into the balance of the mortgage, or paid separately. The life of the mortgage would not necessarily be extended.
Banks already offer a service like this, said Committee chairman MK Eitan Cabel, but do not always inform customers of the conditions involved. Thus this law, he said, was an important one that would help protect consumers. “This law provides an insurance policy for consumers,” Cabel said. “It will make the process more transparent, while ensuring that consumers are safe from legal action for nonpayment of mortgages during a period when they need help.”