The Financial Services Agency (FSA) is firming up plans that would reduce or exempt home loan repayments for struggling borrowers. These are extraordinary measures that would apply to those who have been affected by the coronavirus pandemic and its economic impact, and help to prevent home foreclosures and personal bankruptcies.
The measures could be implemented as early as December 1.
Back in October, the Guidelines for Debt Consolidation for Victims of Natural Disasters (2015) was revised with references to the coronavirus added. The FSA has already started briefing the Japanese Bankers Association Japan Federation of Bar Association. Under the Disaster Relief Act, eligible borrowers can consult with their bank to decide on a course of action to avoid foreclosure. This may include extending the repayment schedule or even selling the mortgaged property. These debt consolidation measures are typically only used in times of natural disaster, and only 498 cases to date have been granted.
Sources:
Kyodo, October 5, 2020.
The Tokyo Shimbun, October 5, 2020.
