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Precedent-setting ruling to ease way for homebuyers

Sharon Shpurer Haaretz
Precedent-setting ruling to ease way for homebuyers - Israel - Property - Real Estate

A court has annulled clauses in a housing loan agreement with First International Bank of Israel, forging the way for a sweeping revision of standard terms that have long plagued mortgage borrowers here.

The ruling ends a saga that began when the supervisor of banks filed an application to the Standard Contracts Court a few years ago.
A spokesman for First International said its legal advisers were reviewing the decision and would act accordingly. If the bank doesn't appeal, the Bank of Israel is expected to instruct all Israeli banks to remove similar clauses from all future housing loan contracts - and probably from existing ones as well.
Clauses to be canceled include one stipulating that banks may increase or add on new fees over the life of a loan, even if the fees are not in the original loan contract.
Another clause to be canceled allows banks to call in a loan for immediate repayment if a payment is just 15 days late. The court found the term to be prejudicial, and will allow banks to demand immediate repayment only after a 30-day delay of at least 5% of the balance of a loan, or a 90-day delay of two payments.


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