Islamic Mortgage Guarantee Programme (IMGP)
What is IMGP?
- IMGP provides ‘first loss’ protection on a mortgage portfolio while the mortgage assets remain on the Originator’s books through Cagamas’ wholly owned subsidiary, Cagamas SRP Berhad (CSRP).
- This programme is formulated under Shariah principle of Kafalah and Wakalah.
CSRP will provide ‘first loss’ protection to mortgage originators in Malaysia on a portfolio basis. No individual financing can be taken out from the pool other than natural redemption or amortisation to below the protection threshold.
Eligible Financing Type
- Standardised and centralised guarantee programme offered to banks for Islamic mortgage financing.
- Islamic residential mortgage financing complying with the standard Eligibility Criteria (EC).
- Current financing-to-value (FTV) ratio of the Mortgaged Property as at the Guarantee Date is not more than 95%.
- Initial guarantee amount is the difference between the current financing amount and the protection threshold amount (e.g. 79.9% of property value at Guarantee Date).
- The guarantee amount will reduce in accordance with the individual financing amortisation schedule which will be determined at the Guarantee Date.
- The guarantee amount is the difference between the “scheduled” outstanding principal balance and the protection threshold.
Lapse of Protection
Protection will lapse automatically once:
- The “scheduled “ outstanding principal balance of the financing falls below the protection threshold amount (e.g. 79.9% of the property value as at Guarantee Date) by way of financing amortisation or discharge.
- Non-compliance with Representation, Warranty and Eligibility Criteria.
- Non-payment of guarantee fee by the Originator.
- Payment of Claim Amount by Cagamas SRP to the Originator.
- No guarantee fee for Islamic mortgage financing.
- This fee is applicable for IMGP.
- Wakalah fee is either a one-off payment for the entire protection tenure or on an annual fee basis paid by the Originator.
- Exclusion of protection includes events of fraud, misrepresentation of the borrowers/obligors and/or the loan/financing originators, breach of specified eligibility criteria of the loan/financing as at the Guarantee Date and/or breach of representation or warranty by the loan/financing originators, etc.
- Transfers credit risk
- Capital relief is based on BNM Risk Weighted Capital Adequacy Framework
- Facilitates management of portfolio concentration risk
- Improves Return on Risk Weighted Capital
- Improves earning stability
- Limits credit exposure to an acceptable level
- Mortgage assets remain on the balance sheet