FORCED SALE OF MORTGAGED PROPERTIES IN KIGALI: THE IMAGE OF REAL PROPERTY VALUERS

Vedaste Havugimana, Marie Grace Nyinawabeza and Bernard Nsanzimana

AfRES from African Real Estate Society (AfRES)

Abstract: Valuation as an art and science of determining the monetary worth of real property has had a direct and critical relationship with mortgage lending. This led directly to the high involvement of real property valuers in mortgage lending decisions. The aim of this paper is to understand the role of valuations in the mortgage approval process in order to find out whether the valuers are contributing to the loss caused by forced sales of mortgaged properties and come up with an approach to regulate financial systems in a country to reduce loan default. To accomplish this aim, questionnaires, structured interviews, and observations have been used among different research groups. Moreover, views taken from related literature to discover important variables relevant to the topic, and gaining a new perspective. Statistical and content analysis were used to discuss and analyze data collected to provide a meaningful context vis-a-vis the study aims. It found the liable party for the loss accounted for by the borrowers and lenders during forced sales. The research also reveals little influence in valuation in Rwandan valuation practice, which was recommended for further research to determine its associated effects. The best practice found is one from Seoul, Korea called “Countercyclical Macro Prudential Approach”. Recommendations have been made by researchers in order to govern financial systems by avoiding mortgage loan default to all involved groups in the mortgage market in Kigali.

Keywords: forced sale; mortgage loan; property valuer (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2016-09-01
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