Latvian parliament passes amendments to make "jingle mail" optional

Latvian lawmakers on Thursday passed in the final reading amendments to several laws to make the so-called "jingle mail" provision, allowing defaulting mortgage holders to mail their home keys to creditors to get rid of their debts, optional.

The parliament amended the Insolvency Law, removing from it a much criticized requirement for banks to include the "jingle mail" option in all mortgage contracts, which would effectively make all mortgage loans non-recourse loans.

Under amendments passed to the Consumer Protection Law, banks will be required to offer two alternative mortgage contracts to their clients - one that includes the "jingle mail" option and the other making the borrower fully responsible for the repayment of the loan. The creditors, however, will be able to apply different terms to each type of contract, while the borrower will have the opportunity to choose between the two contracts offered by the bank.

The draft amendments were pushed through the parliament in a fast-track procedure in two readings after the Association of Latvian Commercial Banks warned last year that the "jingle mail" provision, which makes the insolvency procedure for individuals significantly easier, would make mortgage loans too costly for most Latvians, as the banks would have to increase down-payments and interest rates on mortgage loans to offset possible risks.

The amendments will take effect on March 1, 2015. Endit