Private housing sector witnesses the establishment of 750 escrow accounts in Volga-Vyat Bank, part of Savings Bank group.
In a significant move towards enhancing security and transparency in real estate transactions, Sberbank's Volga-Vyatka Bank has introduced the use of escrow accounts for mortgage construction as early as spring 2024. This decision follows regulatory mandates and is part of a nationwide initiative to protect homebuyers and improve construction financing transparency.
The adoption of escrow accounts has gained momentum, with over 1,750 accounts opened for individual housing construction in nine regions served by Volga-Vyatka Bank. These accounts, holding a total of 11 billion rubles, have facilitated the construction of homes for over 680 families.
Escrow accounts serve as a financial mechanism where buyers’ funds are held securely and released to the developer only upon meeting specified construction milestones. This approach offers several benefits. Buyers gain financial security as payments are controlled and conditional, while developers have a clear payment schedule linked to verified progress, reducing risks of non-payment or misuse of funds.
The use of escrow accounts also supports safer real estate transactions, improving the reputation and reliability of Sberbank's financing services. By ensuring funds are only used for actual construction work, homebuyers are protected, and overall market stability is enhanced by reducing defaults and construction delays.
In compliance with Russian federal law, only deposits into escrow accounts are permitted for financing individual housing construction. Developers must meet construction benchmarks verified by independent appraisers or authorities to receive payments from escrow. Financial institutions like Volga-Vyatka Bank must also comply with these regulatory frameworks and ensure escrow management aligns with legal standards.
The rise in escrow account usage at Volga-Vyatka Bank is consistent with recent measures supported by the Ministry of Construction and Housing and Communal Services of the Russian Federation. This approach is also mandatory in state-backed mortgage programs, offering preferential financing for contractors who meet the "Dom.RF" subsidy program criteria for individual housing construction.
Clients can now open escrow accounts at Sberbank's Volga-Vyatka Bank entirely online, without the involvement of a bank employee. Once the construction is complete, the bank verifies the documents and transfers the money to the contractor. Preferential financing is available for contractors who meet the "Dom.RF" subsidy program criteria, with the option to repay the loan using funds from escrow accounts opened by individual clients under construction contracts.
In summary, the rise in escrow account usage at Volga-Vyatka Bank reflects both legal mandates and practical benefits for secure funding of individual housing construction projects. This approach not only protects the interests of all parties involved in mortgage construction but also contributes to overall market stability.
Investing in real estate with the assurance of finance and a secure transaction can now be accomplished by using escrow accounts, a financial mechanism adopted by Sberbank's Volga-Vyatka Bank. By opening escrow accounts, homebuyers in nine regions served by this bank have secured funds for construction, with more than 680 families benefiting from this service. This practice, in compliance with Russian federal law, is not only a response to regulatory mandates but also an effective tool for enhancing the reputation and reliability of Sberbank's financing services in the industry of real estate and finance.
