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Report: Romanian President signs controversial mortgage bill

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Report: Romanian President signs controversial mortgage bill

Romania'sPresident Klaus Iohannis on April 28 signed a bill that will allow retailmortgage holders to surrender real estate collateral in exchange for writingoff their loans, Reuters reported.

Iohannishad sent the initial version of the draft law back to parliament, whichintroduced a number of amendments. The final version will apply tomortgages worth up to €250,000 and will exclude loans for first-time buyersobtained under a state subsidy program.

Thelegislation will be applied retroactively, which is against EU rules, Reutersnoted. It has been criticized by local commercial banks, the IMF, theEuropean Commission, the ECB and the Romanian central bank, which expressedconcern that it could negatively affect economic growth, trigger a ratingsdowngrade and increase funding costs for sovereign debt.