It stands for Certificat Hypothécaire Obegi – شهادة الضمانة العقارية
The idea behind the CHO is that you mortgage your asset to the bank, for
a short term ( 1 to 12 months) so that the bank can borrow from other
banks while using your mortgage as collateral.
You can pledge your CHO for the bank to borrow. You are taking the risk of the bank.
You could also pledge the CHO to borrow or have someone else you know/trust borrow. In this case , it works just like a normal mortgage but in a more fluid and less expensive way.
Mortgaged real estate in Lebanon today is worth around 50 Billion Dollars, which is almost 5% of the total value of real estate (estimated at 1 Trillion Dollars).
It is a private company, subject to the control of the Central Bank, which will be in direct contact with the banks and the real estate civil administrations.
Ideally, it will be owned 50% by the banks, 25% by the promoter of the idea, 15% by the IFC, and the rest by private investors.
Yes, a specific “real estate assets management software” is being developed to gather all the real estate data and do a standard valuation based on artificial intelligence, with the help and supervision of experts.
The agreed upon value of the CHO certificate will remain the same until maturity.
If the owner wishes to renew his CHO deposit after the maturity date, his real estate asset will be re-evaluated and a new certificate will be issued with the new value, in compliance with the price changes over time.
The CHO is by definition a guarantee. It can neither be sold nor transferred. It can only be pledged to allow the depositary bank to borrow more easily through the interbank market.
According to the Lebanese draft law, there will be no mortgage fees.
The registration of the real right arising from the real estate certificate on the deed of property is exempt from any fee; writing off the registration is also exempt from any fee. (Article 5)
For the depositor: the bankruptcy of the bank, similarly as for a cash deposit, might lead to the loss of the asset.
However, this is a low risk since the debtor is a bank which is supervised by the Central Bank and your deposit is for a short term period ( 1 to 12 months).
For the Economy: the risk could be the asset inflation. If your real estate is giving you 20% more than before, theoretically, the value should also increase.
We also have the systemic risk. If a bank goes bankrupt, the sale (or anticipation of sale) of a large number of assets could ignite a large real estate sell-off, resulting in a systemic crisis.
Banking inclusion for certain people, especially those who are rich in real estate and poor in liquidity. They will have a bigger chance of “bankarization”. (NB: today in Lebanon only 50 % of the population has a bank account).
Experience shows that activities that are not public by nature are
performed more efficiently by the private sector.
It is stated in the Lebanese draft law that a joint stock company shall be
established under private law and will be subject to the control of the
Central Bank.
Because they are related to the World Bank and they are established
internationally, which gives more credibility to the company and makes it easier
to be recognized abroad.
We cannot know for sure, but counting from the date the law is voted and taking into
account the time needed for the drafting of the application decrees and for the Central
Bank to grant the licenses for the establishment of the company and make the necessary
decisions to determine its mode of operation, it might take more or less 3
years in Lebanon.
From the yearly subscription of banks who will have access to the real estate data,
as well as a certain % on all transactions related to the CHO and the fee on the
mortgage operations.
From fees paid by experts, real estate owners and other entities using the software to gain
access to the real estate data.
Logically this is how it should be. If the law states differently or if the authorities
do not accept, it will make it difficult for the CHO company to operate.
The main information will be accessible for free , however , like all other data
platforms, for more details or additional information people or entities might
need to pay a fee .
In theory, the effect should be minimal since CHO is neither monies nor cash:
it is posted off-balance sheet. However, since it will have an impact on
growth through increased credit and strengthen real estate sector, this
should lead to higher wages and real estate prices.
Normally the price of real estate should increase; however, with the
increased transparency of the real estate sector and the availability of
standard values, prices might decrease.
Certainly, better finances will allow more projects.
In the case of Lebanon, if we look at the past 20 years ( since the war
ended), a lot of money came in. If there had been no projects , this money
would have gone out.
Depositors are invited to deposit, in the failed bank, a cash amount
equivalent to the face value of their CHO to be able to withdraw the
guarantee certificate of their real estate asset.
If the equivalent cash amount cannot be deposited, the underlying certificate
is considered part of the bank’s financial liabilities and is subject to the legal
provisions that govern the bankruptcy of banks. If the depositary bank gave a
priority right to some of its creditors, these creditors shall have the right of
priority on these revenues.
Improved liquidity position of banks is likely to increase their lending capacity.
Enhanced quality (‘Standard Valuations’ of the collateral will be readily
available to banks) and accelerated mortgaging process will stimulate the
granting of credits.
Depending on the Central Bank policy, more credit will be offered or lower
lending rates will be applied.
But we are hoping that Obegi Group will be able to have 25% of the
shares of the CHO company , since Obegi Group conceived the idea, worked for years to advance the project and wants to continue its participation once the project is implemented.
No, it is up to the depositary bank to decide on the % remuneration, a
consideration which will be set by mutual agreement between the bank
and the client.
It stands for Certificat Hypothécaire Obegi – شهادة الضمانة العقارية
The idea behind the CHO is that you mortgage your asset to the bank, for
a short term ( 1 to 12 months) so that the bank can borrow from other
banks while using your mortgage as collateral.
You can pledge your CHO for the bank to borrow. You are taking the risk of the bank.
You could also pledge the CHO to borrow or have someone else you know/trust borrow. In this case , it works just like a normal mortgage but in a more fluid and less expensive way.
Mortgaged real estate in Lebanon today is worth around 50 Billion Dollars, which is almost 5% of the total value of real estate (estimated at 1 Trillion Dollars).
It is a private company, subject to the control of the Central Bank, which will be in direct contact with the banks and the real estate civil administrations.
Ideally, it will be owned 50% by the banks, 25% by the promoter of the idea, 15% by the IFC, and the rest by private investors.
Yes, a specific “real estate assets management software” is being developed to gather all the real estate data and do a standard valuation based on artificial intelligence, with the help and supervision of experts.
The agreed upon value of the CHO certificate will remain the same until maturity.
If the owner wishes to renew his CHO deposit after the maturity date, his real estate asset will be re-evaluated and a new certificate will be issued with the new value, in compliance with the price changes over time.
The CHO is by definition a guarantee. It can neither be sold nor transferred. It can only be pledged to allow the depositary bank to borrow more easily through the interbank market.
According to the Lebanese draft law, there will be no mortgage fees.
The registration of the real right arising from the real estate certificate on the deed of property is exempt from any fee; writing off the registration is also exempt from any fee. (Article 5)
For the depositor: the bankruptcy of the bank, similarly as for a cash deposit, might lead to the loss of the asset.
However, this is a low risk since the debtor is a bank which is supervised by the Central Bank and your deposit is for a short term period ( 1 to 12 months).
For the Economy: the risk could be the asset inflation. If your real estate is giving you 20% more than before, theoretically, the value should also increase.
We also have the systemic risk. If a bank goes bankrupt, the sale (or anticipation of sale) of a large number of assets could ignite a large real estate sell-off, resulting in a systemic crisis.
Banking inclusion for certain people, especially those who are rich in real estate and poor in liquidity. They will have a bigger chance of “bankarization”. (NB: today in Lebanon only 50 % of the population has a bank account).
Experience shows that activities that are not public by nature are
performed more efficiently by the private sector.
It is stated in the Lebanese draft law that a joint stock company shall be
established under private law and will be subject to the control of the
Central Bank.
Because they are related to the World Bank and they are established
internationally, which gives more credibility to the company and makes it easier
to be recognized abroad.
We cannot know for sure, but counting from the date the law is voted and taking into
account the time needed for the drafting of the application decrees and for the Central
Bank to grant the licenses for the establishment of the company and make the necessary
decisions to determine its mode of operation, it might take more or less 3
years in Lebanon.
From the yearly subscription of banks who will have access to the real estate data,
as well as a certain % on all transactions related to the CHO and the fee on the
mortgage operations.
From fees paid by experts, real estate owners and other entities using the software to gain
access to the real estate data.
Logically this is how it should be. If the law states differently or if the authorities
do not accept, it will make it difficult for the CHO company to operate.
The main information will be accessible for free , however , like all other data
platforms, for more details or additional information people or entities might
need to pay a fee .
In theory, the effect should be minimal since CHO is neither monies nor cash:
it is posted off-balance sheet. However, since it will have an impact on
growth through increased credit and strengthen real estate sector, this
should lead to higher wages and real estate prices.
Normally the price of real estate should increase; however, with the
increased transparency of the real estate sector and the availability of
standard values, prices might decrease.
Certainly, better finances will allow more projects.
In the case of Lebanon, if we look at the past 20 years ( since the war
ended), a lot of money came in. If there had been no projects , this money
would have gone out.
Depositors are invited to deposit, in the failed bank, a cash amount
equivalent to the face value of their CHO to be able to withdraw the
guarantee certificate of their real estate asset.
If the equivalent cash amount cannot be deposited, the underlying certificate
is considered part of the bank’s financial liabilities and is subject to the legal
provisions that govern the bankruptcy of banks. If the depositary bank gave a
priority right to some of its creditors, these creditors shall have the right of
priority on these revenues.
Improved liquidity position of banks is likely to increase their lending capacity.
Enhanced quality (‘Standard Valuations’ of the collateral will be readily
available to banks) and accelerated mortgaging process will stimulate the
granting of credits.
Depending on the Central Bank policy, more credit will be offered or lower
lending rates will be applied.
But we are hoping that Obegi Group will be able to have 25% of the
shares of the CHO company , since Obegi Group conceived the idea, worked for years to advance the project and wants to continue its participation once the project is implemented.
No, it is up to the depositary bank to decide on the % remuneration, a
consideration which will be set by mutual agreement between the bank
and the client.