Products Summary

1. Mortgage: Targets High to Medium level final beneficiaries
2. Housing Microfinance: Targets Mid-lower to Lower level beneficiaries

1.1 Mortgage

Two types are issued under this product

1.1.1 Re-finance Loans

• Re-financing loans are advanced to banks that have created portfolios composed of mortgages complying with TMRC eligibility criteria.
• Re-financing loans are secured by a debenture over a mortgage portfolio with a minimum coverage ratio of 111% required. If the coverage ratio declines to below 111% then the borrowing bank is required to submit additional loans to cover the facility/Alternative collateral inform of Treasury Bonds to reinstate coverage ratio to 111%.
• Maximum tenure is 5 years/ 60 months. Renewal needs to be processed after 5 years. The loan term also depends on term to maturity of the loans in the mortgage portfolio proposed for re-financing.

Mortgage Loan Eligibility Criteria

Loans refinanced by TMRC must meet the following eligibility criteria:

1. Loans refinanced by TMRC should be fully disbursed and should be for the purchase, refinance, construction or renovation of a residential building.
2. Mortgage loans refinanced with TMRC should have 11% more in their total outstanding debt over TMRC facility at time of disbursement/renewal (LTV 90%). During the tenure of the facility, the diminution in total value of the outstanding debt of refinance mortgage portfolio can be reinstated using other qualifying collaterals for limited time while disbursing or perfecting other residential mortgages for future replenishment and substitution.
3. TMRC will accept only first liens.
4. The residential mortgage loans portfolio refinanced should at the time of refinance/replacement have a remaining weighted average life which expires on or after the maturity date of the facility to be provided / being provided by TMRC.
5. The residential mortgage loans for refinanced portfolio must have performed for a minimum of 6 months prior to being used for refinancing/replacement.
6. The mortgage is insured against fire up to its full insurable value with a loss payable endorsement designating the PML as the first loss payee.
7. To the best of the knowledge of the mortgage originators, the borrower is not a discharged bankrupt, or no bankruptcy proceedings have commenced against the borrower.
8. To the best of the knowledge of the mortgage originators, the borrower is not deceased.
9. The loan has been extended in local currency only.
10. The borrower is a natural person.
11. There should be adequate provision in the mortgage instrument enabling the mortgagee to transfer the charge or assign all its rights, interest and obligations under the mortgage instruments to any person as the mortgagee deems fit.
12. TMRC shall refinance mortgage loans up to the value of TZS 500 million. (TMRC can partially re-finance mortgage loans with values exceeding TZS 500 million as long as it re-finances only that portion up to TZS 500 million limit however such loans (i.e. with values exceeding TZS 500M) shall not exceed a maximum of 25% of any given re-financed mortgage portfolio).
13. Maximum refinanced mortgage to property value (value being the lower of property price and appraised value) of 90%. Loan-to-value of 100% can be acceptable provided additional collateral is provided in the form of fixed deposits, pension benefits/entitlement, collateral replacement indemnity or government securities whose total value shall be at least 10% of the value.

1.1.2 Pre-finance Loans

• Pre-financing loans are advanced to banks that have recently launched their mortgage product or are in early stages of product provision hence do not have sufficient loans for a re-financing transaction or have mortgage loans but these loans do not comply with TMRC eligibility criteria.
• These loans are secured by Treasury Bonds. A minimum coverage ratio of 100% is required for this form of collateral. A debenture over T-bonds is created to secure the facility and the T-bond is transferred as collateral in TMRC’s CDS account.
• Borrowing banks that access pre-financing loans need to ensure the facility availed is converted into mortgage loans complying with TMRC eligibility criteria at the following annual conversion rates:

 Failure to meet the pre-agreed annual conversion rates attracts penalties according to the following formula:

Penalty due to failure to meet pre-financing conversion rates =

Amount unapplied to mortgage loans at the end of Year n multiplied by (n years average interbank rate + 2% premium)

1.1.3 Costs and Charges

• Interest: subject to cost of funding and membership status of the borrower to TMRC.
• Repayments: subject to funding requirements largely; Interest is serviced quarterly, principal is paid/renewed at maturity.
• Facility fees: 1.1% of applied amount for non-member banks. For member banks, depends on tenure of the loan.

1.2 Housing Microfinance

TMRC provides medium to long term financing to Financial Service Providers (FSPs) who have developed a Micro Housing Loan (MHL) product that provides accessible and affordable housing loans to the lowest income Tanzanian households.

1.2.1 Re-finance Loans

• Re-financing loans are advanced to banks that have created portfolios composed of housing microfinance loans complying with TMRC eligibility criteria.
• Re-financing loans are secured by a debenture over a MHL portfolio with a minimum coverage ratio of 125% required. If the coverage ratio declines to below 125% then the borrowing bank is required to submit additional loans to cover the facility/Alternative collateral inform of Treasury Bonds to reinstate coverage ratio to 125%.
• Maximum tenure is 5 years/ 60 months. Renewal needs to be processed after 5 years. The loan term also depends on term to maturity of the loans in the mortgage portfolio proposed for re-financing.

1.2.1.1 MHL Eligibility Criteria

Housing Microfinance portfolio refinanced by TMRC must meet the following eligibility criteria:

1. All MHLs must be secured by a mortgage, assignment of residential license or sales contract or certification from Village Executive Officer/local government, pension fund account, group lending arrangement or other assets approved in advance by
2. At all times, the principal balance of MHL loans outstanding in the collateral pool must equal at least 125% of the Loan Higher or alternative collateral requirements may be established based on credit review.
3. Proceeds of MHLs which have been prepaid in full or in part may be recycled into new MHLs provided that the conditions listed above have been met.
4. An MHL must be exchanged for a new MHL of equal or greater value, or, on the next Loan payment date, the Loan must be prepaid in an amount equal to the outstanding balance of the MHL if any of the following occurs, if the institution does not have a replacement:
   • An MHL becomes Past Due
   • The property securing an MHL is damaged beyond repair or destroyed
   • Death or permanent disability of the primary obligor
   • Bankruptcy of the primary obligor or obligor’s business
5. At least 10% of the portfolio should be provided to Women and Youth category (Youth defined as < 35 years) and finance environmentally safe housing projects (e.g., projects that do not result in a negative impact on the environment, promote green housing, cleaner production processes and energy-saving options).
6. Refinancing must not exceed 25% of the FSP's gross loan portfolio outstanding.
7. The minimum disbursement amount to a FSP would be TZS 500 million.

1.2.2 Pre-finance Loans

Eligible MHLs equal to at least [20%] of the loan disbursed and a pledge of Treasury securities or cash equivalent assets equal to 100% of the Loan outstanding balance which is not secured by MHLs. The Borrower must replace such collateral with Eligible MHLs within 12 months of Loan disbursement.

Failure to meet the pre-agreed annual conversion rates attracts penalties according to the following formula:

Penalty due to failure to meet pre-financing conversion rates =

Amount unapplied to mortgage loans at the end of Year n multiplied by (n years average interbank rate + 2% premium)

1.2.3 Reporting Requirements under HMF Product

1. Quarterly unaudited Financial Statements prepared in accordance with Tanzanian Accounting Standards, to be delivered within 30 days of the end of each fiscal quarter.
2. Annual, signed audited Financial Statements to be delivered within 90 days of the fiscal year end.
3. Each request for a Loan Advance must include a Collateral Report
4. Beginning with the execution of the Loan Agreement, a monthly Deployment report detailing a) inquiries received, b) applications received, c) loans approved, d) loans denied and reason for denial, and e) projected funding needs from TMRC for the following 12
5. Within 15 days of the end of each fiscal quarter, a Collateral Portfolio Status Report which includes information as per Collateral

1.1.3 Costs and Charges

• Interest: subject to cost of funding and final interest rates delivered to consumers through weighted average interest rate charged by FSPs.
• Repayments: subject to funding requirements largely; Interest is serviced quarterly, principal is paid/renewed at maturity.
• Facility fees: 1% of applied amount for non-member banks. For member banks O.75% both excluding VAT.