Determination of mortgage lending value

(1) The valuation serving as the basis for determining the mortgage lending value must be carried out by an appraiser independent of the lending decision who must have the necessary professional experience and the necessary specialist knowledge for mortgage lending value determinations.
(2) The mortgage lending value may not exceed the value resulting from a prudent assessment of the future marketability of a property and having regard to the long-term, sustainable characteristics of the property, normal regional market conditions, and current and possible alternative uses. Speculative elements may not be taken into account in this. The mortgage lending value may not exceed a market value determined in a transparent manner and by a recognised valuation method. The market value is the estimated amount for which a mortgaged property could be sold, on the valuation date, between a willing seller and a willing buyer, after an appropriate marketing period, in an arm's length transaction, with each party acting knowledgeably, prudently and without compulsion.
(3) The mortgages used for cover on building plots and on new buildings not yet completed and not yet profitable may not together exceed 10 per cent of the total amount of the cover assets used for cover of the mortgage Pfandbriefe. Mortgages on building plots may not exceed 1 per cent of the total amount of the cover assets used for cover of the mortgage Pfandbriefe. Mortgages on land not yielding a permanent return, in particular pits and quarries, are excluded from use for cover, as are mortgages on mines. Mortgages on other entitlements to which the provisions relating to land apply are likewise excluded from use for cover of mortgage Pfandbriefe, provided the entitlements do not yield a permanent return.
(4) The Federal Ministry of Finance is authorised, by statutory instrument not requiring the consent of the Bundesrat, to determine details of the methodology and form of the determination of mortgage lending value and the minimum requirements for the appraiser's qualification. The statutory instrument may provide for relief in the valuation of mortgaged properties used predominantly for residential purposes. Before issuing the statutory instrument, the peak associations of the credit industry must be heard. The Federal Ministry of Finance may transfer this authorisation, by statutory instrument, to the Federal Financial Supervisory Authority.