Mortgage Bill passed

Mar 27, 2009

The Parliament has passed the Mortgage Bill, 2007 with amendments. The Bill is to consolidate the laws relating to mortgages, revamp the mortgage industry and make a law that is consistent with the Constitution and the Land Act.

By Joyce Namutebi and Catherine Bekunda

The Parliament has passed the Mortgage Bill, 2007 with amendments. The Bill is to consolidate the laws relating to mortgages, revamp the mortgage industry and make a law that is consistent with the Constitution and the Land Act.

Lands minister Omara Atubo said the law would help the mortgage industry to grow. “It is going to encourage development, especially for those who want to mortgage houses,” he said, adding that the Bill would be fine-tuned for assent by the President.

Mortgage is borrowing money with property such as land and buildings as security, according to Bugweri MP, Abdu Katuntu. The Bill provides for mortgaging of a matrimonial home, consolidation and variation of mortgages. It also considers discharge and release of mortgages and powers of the borrower and the lender and powers of court with respect to mortgages.

One of the contentious parts in the Bill, which was passed on Wednesday, was Clause 7 on mortgaging customary land. After days of protracted debate, the House approved amendments by Betty Amongi (Independent) and Alice Alaso (FDC) barring mortgaging of customary land.

Customary land is that owned by a family or community. The Bill allows an individual who owns customary land to mortgage it, but with the consent of the spouse and children.

Abdu Katuntu, one of the MPs who earlier wanted the clause on mortgaging customary land deleted from the Bill, said allowing the mortgaging of customary land would cause social unrest.

“Most of the citizens who own land customarily are vulnerable. Unscrupulous individuals will mortgage tribal or family land and fail to pay banks. The result will be banking institutions taking over family and tribal land, thus denying the whole community its valuable asset,” Katuntu said.

Another contentious issue was the definition of a matrimonial home. Some MPs argued that a person could have many matrimonial homes and decide to mortgage all of them at a go.

The Speaker, however, clarified that mortgage should apply to the principal matrimonial home. The MPs agreed that mortgaging of a matrimonial home, including mortgaging customary land hosting a matrimonial home, was valid only if the document or form used in applying for the mortgage was signed by the borrower and the spouse or spouses living in that home.

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