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2 - Principals of Refinancing, and Replacements

The availability of advances to each client is based on the financial condition of the Client, the adequacy of collateral pledged to the EMRC to secure such advances, and the client’s compliance with the prevailing laws and regulations. A client’s access to advances is contingent upon:

1.     Demonstration and maintenance of creditworthiness and the required commitment to mortgage finance as required by applicable laws and executive regulations;

2.     Execution of an appropriate Advances Agreement;

3.     Adequate collateral as per Qualified Collateral covering at least 110% of requested borrowing (According to Product type); and

4.     Full recourse on the client in case of any default on the underlying mortgage loans.

Prior to accepting a commitment for an advance or disbursing an advance, credit and collateral analyses will be performed to ensure compliance with FRA's regulations and advances guidelines, and to verify the borrowing institution's financial integrity. Borrowing capacity, as determined by the client’s ability to repay principal and interest, will be reviewed as outlined below. At a minimum, the following will be reviewed:

1.   Capital adequacy.

2.   Availability of qualified collateral.

3.   Trends in operating ratios.

4.   Assets quality.

5.   Sufficient liquidity.

6.   Profitability.

7.     Management efficiency.


The EMRC's credit underwriting is based upon a risk-focused approach. Each PML is reviewed at least once annually to determine the ongoing lending relationship between the EMRC and PML. For each PML, the EMRC determines aggregate credit risk based upon its internal risk analysis of each PML's financial condition and performance.

All extensions of credit to clients by EMRC must be secured by sufficient qualified collateral at all times. In accordance with applicable regulations, EMRC is not permitted to lend to clients on an unsecured basis. In addition to qualified collateral EMRC will have full legal recourse on clients. The amount of collateral pledged establishes a ceiling on the client's borrowing capacity with EMRC. EMRC's senior management, with the approval of the Board, may grant exceptions to the provisions of this policy when necessary or in EMRC's interest. Extensions of credit will be:

  • In compliance with FRA's regulations and advances guidelines;
  • In accordance with the Mortgage Finance Law and relevant executive regulations.
  • In conformance with EMRC's credit and collateral requirements.
  • Properties must be valued by appraisers approved by FRA at a minimum.

All clients are required to execute a Representations and Warranties document with respect to any mortgage loans pledged as collateral to EMRC. This document requires the client to certify to knowledge of the foregoing policies, and compliance with those policies. In the event that any loan in a collateral pool is (i) found not to comply in all material respects with applicable laws, or (ii) not accepted as Qualified Collateral, the client agrees to immediately remove said loan and replace it with Qualified Collateral of equivalent value. The client agrees to indemnify and hold EMRC harmless for any and all claims of any kind relating to the pledged loans.

EMRC will take such steps as it deems necessary to protect its security position as to outstanding advances. These steps may include, but are not limited to, requiring the delivery of additional collateral, whether or not such additional collateral would be eligible to originate an advance.

Unless otherwise specified by EMRC to a client in writing, the collateral-maintenance level for a client is the aggregate amount of qualified collateral that has a value at least equal to 110% of the aggregate amount of the client's outstanding advances from EMRC (According to Product type).


1.     Are required to segregate, label as "Collateral for the Egyptian Mortgage Refinance Company," and provide a listing to EMRC identifying specific qualified collateral sufficient to satisfy the collateral-maintenance level.

2.     May not use, commingle, encumber, or dispose of collateral that has been segregated, labeled, and listed without the express written consent of EMRC.

3.     Agree to permit EMRC personnel to make periodic on-site verification of collateral pledged. An EMRC examination will be carried covering a sample of the portfolio representing at least 5 percent of the mortgage loans assigned and will be selected randomly. EMRC examiners must review all conditions set by EMRC, including those on eligibility, accuracy, and adherence to the reported information on defective and prepaid loans. Any anomaly is subject to replacement. In case of problems, EMRC could require a second, more intensive examination. PML may be required to provide additional compensatory collateral on the whole portfolio of this client if the more intensive examination reveals anomalies. Provide EMRC with full legal recourse.

Clients, which in EMRC's sole discretion, show a worsening of their financial status, are subject to certain restrictions. Any restrictions determined to apply to these clients will be communicated by letter and through discussion with the clients’ senior management, and will remain in effect until the client is notified of a change in status. EMRC may limit the terms for new advances and renewals of advances.

If the value of a clients collateral declines below 110% of advances (According to Product type) because of loan amortization, or loan payoffs, EMRC may, at its discretion, require the client to substitute qualified collateral that is acceptable to EMRC to offset the decline in the value of the collateral held by EMRC.

EMRC may require, in its sole discretion, further steps by a client in order to perfect EMRC's security interest in collateral provided by the client.

All fees and costs incurred by EMRC in connection with its collateral requirements will be charged to the client as per contract.

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