The 'Nationale Hypotheek Garantie' (NHG) is a public mortgage loan insurance scheme in the Netherlands. The NHG Guarantee protects borrowers from any residual debt after a foreclosure following a default on their mortgage loan. The NHG Guarantee covers the outstanding principal, accrued unpaid interest and disposal costs. Since 1 January 1995 'Stichting Waarborgfonds Eigen Woningen' (the 'WEW'), a central privatised entity, is responsible for the administration and granting of the NHG Guarantee, under a set of uniform rules. The WEW finances itself, inter alia, by a one-off charge to the borrower of 0.70 percent (as of January 1, 2020) of the principal amount of the mortgage loan. Besides this, the NHG scheme provides for liquidity support to the WEW from the Dutch State and, in respect of guarantees issued prior to 1 January 2011, from the participating municipalities. Furthermore, the WEW is rated by two credit rating agencies.
|By||LT Rating||ST Rating||Obtained|
|Fitch Ratings||AAA (stable)||F1+||21 June 2012|
|Moody’s||AAA (stable)||n/a||15 September 2008|
Under the NHG scheme, the lender is responsible for ensuring that the guarantee application meets the terms and conditions ('voorwaarden en normen') of the NHG Guarantee. If the application qualifies, various reports are produced that are used in the processing of the application, including the form that will eventually be signed by the relevant lender and forwarded to the WEW to register the mortgage and establish the guarantee. Irrespective of scheduled repayments or prepayments made on the mortgage loans, the NHG Guarantee reduces on a monthly basis by an amount which is equal to the amount of the principal portion of the monthly instalment calculated as if the mortgage loan were being repaid on a thirty year annuity basis. This may result in the lender not being able to fully recover any loss incurred with the WEW under the NHG Guarantee. For mortgages originated from 1 January 2014, the lender shares for 10% in any losses on the claimed amount under a NHG guarantee.
The mortgage conditions applicable to each mortgage loan should include certain provisions, among which the provision that any proceeds of foreclosure on the mortgage right and the right of pledge on the life insurance policy, the investment funds or the balance standing to the credit of the bank savings account associated with a bank savings mortgage loan shall be applied firstly towards repayment of the mortgage loan guaranteed under the NHG scheme. Furthermore, for houses purchased before january 1st 2013, according to the NHG Conditions interest-only mortgage loans were allowed, provided that the interest-only part did not exceed 50 per cent. of the value of the property. For houses purchased after january 1st 2013, mortgages have to be repaid on a 30 year linear or annuity basis.
A NHG guarantee can be issued up to a maximum amount of EUR 310,000 (as of 1 January 2021, EUR 325.000). The annual increase of this amount is linked to the average house price. Within three months of the private or forced sale of the property, the lender must make a formal request to the WEW for payment. After receipt of the claim and all the supporting details, WEW must make payment within two months. Pursuant to the NHG conditions, the WEW has no obligation to pay any loss (in whole or in part) incurred by a lender after a private or a forced sale of the mortgaged property if such lender has not complied with the NHG conditions.