Mortgage lending in Egypt has been slow to develop with the general banking community being the slowest to respond. Despite the fact that the Consultant engaged by Egypt Financial Services Project (EFS) has yet to have direct communications with banks to discuss the reasons why, notes from meetings between EFS and selected banks have been provided. The summary of the minutes reveals that some banks are reluctant to enter the market as it is perceived that it is too young and legal processes have not been tested. The intent of this recommendation is to develop a course of action for EFS staff to pursue when making contact with a bank to determine whether and how EFS can provide an analysis of methods and procedures for originating, processing, underwriting and funding mortgage loans. The following recommendations propose a three-tiered approach to making contact with a selected bank, determining the needs of the bank, assessing the procedures in use and providing a series of recommendations for the implementation of an efficient mortgage loan process. This group is the heart of the lending operation as all new mortgages are originated and approved through this unit. Property Appraisers fulfill a most important role in the operation of a mortgage lending department. As the foundation of this type of lending lies in the value of the asset being financed and the collateral security provided the lender through the mortgage instrument, determining an acceptable appraised value of the financed real estate is essential.

The valuation of the real property upon which the lending agency will provide long-term loans secured by mortgages based upon the valuation found, is the primary use of appraisals by lenders. In general, mortgage-backed loans are made to construct, finance the acquisition of and/or rehabilitate the real property to use the property as collateral for commercial loans. The lender will establish an acceptable loan-to-value ratio and set loan terms based upon the appraiser’s report of the quality and monetary value of the property. The other principle components of the mortgage loan, the terms and conditions of the loan, the interest rate charged and the financial strength of the borrower, are actually generic to most credit extensions. The market value and perceived salability of the property covered by the mortgage instrument is the unique factor in mortgage lending.