Banks Probe Fraud in Moroccan Social Housing Loan Scheme

It all started from the observation that the volume of doubtful debts related to real estate loans has experienced a worrying increase. The preliminary examination of the recovery files, transferred to the departments of legal and judicial litigation management (Litigation Service), revealed a concentration of fraud cases in areas located on the outskirts of Casablanca, explain sources at Hespress. The preliminary investigations carried out by the internal control services of the banks concerned have proven fruitful. They discovered that the residents of social housing apartments have been victims of indebted owners. They have concluded "rahn" (pledge) contracts of common use and have received amounts that can reach 100,000 dirhams, in addition to monthly rents averaging around 1,000 dirhams.

This system implies that the amount of the pledge must be returned after the end of the contract, generally after a year, or to renew it while keeping the initial amount. But it was found that the bank customers who acquired these apartments on credit have quickly disappeared after cashing the pledge amounts. They thus leave the "tenants" who find themselves confronted with payment notices, recovery procedures, seizures, and auctions at advanced stages. The fraud cases related to the "rahn" system concern social housing apartments acquired thanks to the former support system (250,000 dirhams), in particular through the "Fogarim" and "Fogaloge" products, confirmed the same sources, noting that the owners of the apartments, unable to cover the mortgage installments and to respect their commitments towards the creditors, have opted for this system.

The demand for the "rahn" system from people looking for housing has increased, due to the lack of social housing supply in the economic capital and its surroundings, as well as the rise in rents to record levels, the investigations have also revealed. This situation has moreover pushed many tenants to look for ways to reduce costs by opting for the pledge system. The internal control services of the banks have also noted an increase in commercial practices involving state-subsidized social housing. Some clients buy apartments to rent them out or use them as a second home, particularly in inland cities or on the coast, the same sources said, adding that they often circumvent the rules to obtain administrative certificates allowing them to benefit from the tax exemption provided by the government on VAT.

"After a period of four years, these beneficiaries of housing support call on intermediaries to obtain residence certificates proving that they have occupied the apartments acquired as part of social housing projects," the same services have also noted. The "buyers of these dwellings, benefiting from an exemption from value added tax (VAT), are not in principle authorized to resell them before a period of four years from the date of acquisition, and this," after obtaining a "release" certificate from the tax administration on the property title of the apartment.