Kazakh Mortgage-Backed Securities 2007 1 B.V.
Following discussions with certain of the holders of those of the Kazakh Mortgage-Backed Securities 2007-1 B.V. US$123,000,000,000 Class A Notes due 2029 currently outstanding (the Class A Noteholders ), the Issuer requested further information in writing from BTAI (Q) in relation to certain proposed amendments and waivers on 11 December 2009, to which BTAI has provided the following answers (A) as of 15 December 2009:
1. Collection accounts procedures
(Q) Please provide details of how payments are collected from Debtors in respect of the Mortgage Loans. In particular, do the Debtors transfer payment by wire transfer or direct debit?
(A) Most of the Debtors (90%) prefer cash payments at BTAI’s offices or BTA’s branches. The rest 10% is the wire transfers/withdrawals from credit cards through internet.
(Q) Please confirm whether all Collection Accounts are in the name of the BTA Ipoteka (as Originator) and held by JSC “Bank TuranAlem” as the Collection Account Bank.
(A) Confirmed.
2. Holdings
(Q) Does BTAI or any of its affiliates own any of the Offered Notes? If so could BTAI please provide details of the size of such holdings.
(A) As of today BTAI holds 20 Notes of Class B.
3. Halyk Bank’s role as Back-Up Servicer
(Q) Has the Halyk Bank taken the steps required in Clause 3.1 of the Back-up Servicing Agreement to prepare itself for its appointment of Servicer following the Potential Servicer Termination Event?
(A) Clause 3.1 of the Back-up Servicing Agreement:
Point (a) – done
Point (b) – in work
Point (c) – in work
Point (d) – done
Point (e) – (i) transfer of records-done, (ii) transfer of Mortgage certificates-suspended
Point (f) - suspended
(Q) How long will the Back-up Servicer require to be ready to assume the role of Servicer?
(A) Two/three months more from today.
4. Suspension of BTAI’s banking licence
(Q) Please explain in more detail why the Kazakh authorities have suspended BTAI’s licence to originate mortgages (the licence) and the effect that this has on BTAI’s business.
(A) BTAI breached the capital adequacy ratio because of significant amount of created provisions. Amount of provisions has been deducted from Tier 2 Capital. The breach continued within three subsequent months which resulted on licence suspension. As of November 30, 2009 total amount of provisions reached KZT 4bln.
(Q) Does the suspension of the Licence affect BTAI’s ability to service the Mortgage Loans in any way?
(A) No, the suspension of the Licence didn’t affect BTAI’s ability to service the Loans. BTAI is not granting the loans at all starting from second half of 2008.
(Q) Has BTAI obtained legal advice as to whether it can continue servicing the Mortgage Loans under the Servicing Agreement following the suspension of the Licence?
(A) Of course, first of all it was agreed with FSMA (Financial supervision and monitoring authority) that without the licence BTAI will be acting only as Servicing company under the all previously issued loans. The License gave BTAI the rights to: “Realize bank lending operations namely offer the loans in money format based on the conditions of reward, maturity and repayment”. As of today we act as a Servicer with exercises of the all related activities including repossessions, court foreclosure, out of court foreclosure, payment collections, buy/sell securities, refinance, restructurisations, etc.
5. Servicing Fee
(Q) Please explain why BTAI requires the Servicing Fee to be increased to 2 per cent.
(A) The increased number of problem loans forced BTAI to beef up the Legal department and Post credit servicing department. Number of court hearings increased as well which requires additional expenditures from BTAI’s side.
(Q) Please give details of how BTAI intends to apply the increased fee should this resolution be passed.
(A) To cover the expenses related with point above, for e.g. cover court’s fees, pay salary, pay for re-education of the employees from squeezed departments (Loan department, Accountants, Archive) to make them a specialists on dealing with problem loans, and all other related expenses.
Following discussions with certain of the holders of those of the Kazakh Mortgage-Backed Securities 2007-1 B.V. US$123,000,000,000 Class A Notes due 2029 currently outstanding (the Class A Noteholders), the Issuer requested further information in writing from BTAI (Q) in relation to certain proposed amendments and waivers on 11 December 2009, to which BTAI has provided the following answers (A) as of 15 December 2009.