An approach to the review report within the process of following up the value changes

According to the techniques to reduce the credit risk, in case of the use of internal ratings-based approaches by banks under minimum terms and conditions pertaining to taking the immovable assets into consideration as a guarantee, the values of the immovable assets for commercial purpose and those of immovable assets for residential purpose are reviewed at least once on annual basis. At the standard approach application, however, the periods of time at issue are applied for the commercial immovable asset as 1 year and for the residential immovable asset, however, as three years. In the event that it is deemed as necessary by the organization, the mentioned periods may be determined more prudently. The review is carried out more frequently at circumstances where important changes take place at market conditions. In this respect, it may be possible for the banks to use relevant statistical methods for the review of the values of the immovable assets and determination of the immovable assets requiring revaluation. It is indicated that in case the indicators pertaining to the fact that the values of the immovable assets may have fallen at substantial proportions in comparison of general market prices are found, the immovable asset will be re-appraised by the authorized value assessment establishment, indicated in the first subparagraph of Article 62. At this study sample approach model has been presented to the review reporting in the immovable assets designed for residential objectives, and additionally, important rate, significant changes and revaluation requirements taking place at the comminuques have been interpreted in this respect. It is significantly important to reach data especially in our country and the data of the years 2011-2012-2013-2014-2015 constituting the indemnity depository of a finance institution has been analysed and interpreted. The study has been completed out of thirty provinces throughout Turkey in the immovable assets designed for residential objectives. The revaluation proposal at provinces and towns where risk is observed is described as an acceptable variation at places where the is not important change. A housing price index is published by the Central Bank of the Republic of Turkey on monthly basis in order to interpret the value changes of in the immovable assets designed for residential objectives in our country. The Central Bank procures these data from the banks and publishes the foregoing by taking the year 2010 as basis. However, it is not sufficient to interpret the variation in residential units prices according to the housing price index data and make decision on risk. The banks association of Turkey made an express indication on the subject matter hereof, and it is necessary to constitute the "review process" by the banks. In this case, it is necessary for the review process to be formed up in this respect to be effective and efficient, and to be established by taking advantage of related legislations of countries, pertaining international standards and scientific studies (works). It is also necessary for the bank to make all sorts of records, information, structures and systems with relation to the mentioned review process be available and document the reviews so made. On the other hand, it is said in the provision of the subparagraph (b) that the indicators pertaining to the fact that the value of the immovable asset, may have decreased at substantial proportion subject to general market prices, have to be determined by the bans and no standard hes been brought in for an important rate conception. Additionally, it is observed in the data, published at the housing price index that the provinces are combined and analysed as a consequence, and when required, it can be foreseen that it can also be possible to make study even at district basis. Therefore, the use of only housing price index is not sufficient for the banks. It is indicated at the commuhique that it is necessary to bring the Review reporting into a written state and when required, to be available within the structures of the banks for due audit, and it is necessary for all banks to establish a related unit/department to issue a review report. Within the difficulty of reaching relevant information in our country, the dirty data appears to be that much high as well. The analyses, made out of sales values of real estates bearing residential purposes and taking place at real estate websites do not reflect the reality and they are not the data forming basis for sales and purchase, therefore, the unit values, obtained from the sales offices of the branded housing projects and advertisement for sale will not be correct and sufficient for due review. The most reliable data in the review reporting are the values are the unit values, obtained from expertise reports, issued by the immovable asset appraisal companies, approved by the Capital Markets Board of Turkey and Banking Regulation and Supervision Agency forming basis for loan. It will be more economical for the banks to analyse their own data instead of purchasing data externally and by doing so, to issue their own review report. The data of thirty provinces, analysed at the study, have been examined under the topics constituting footer for the housing price index, and end limit values that may be subject to erroneous analysis have been eliminated and the data, of which current value is not appraised and becomes subject to erroneous domain entry have been eliminated from the study. An index calculation has been made out of the data so obtained and the year 2011 been accepted as the base year and annual-based increase and decrease index data been calculated. Furthermore, the calculation of the accurate certain) values of real estates has been made through the data of 2015 with a method of balancing, and lower and upper limit values of the same have been determined on the sample set and they have been compared with the average unit values, set out within that year. Another sample application, however, is to set off on the basis of title deed records of the real estates and an inference has been made out of annual-based increase-decrease rates countrywide for the renewal of the same real estate. It has been examined in an analysis, made on the basis of one-to-one renewals, whether the purpose for the use of the real estate changed, the decision for pulling down has been made or taken into the scope of urban transformation (renewal), and the relevant results were reached out of clean data (231.385 units of real estates) remained at the end of the analysis. Various comments have been made on the basis of the fact that the results so obtained have been compared with the housing price index, published by the Central Bank the latest, and various comments have been made whether any revaluation decision is to be made in relevant provinces and towns where the real estates subject to the guarantee are situated in and in case any index falls are experienced on annual basis, then whether it is based on an explainable cause.