Through Decree 1233 of September 14, 2020, the National Government modified the coverage of the FRECH NO VIS Program. In this regard, it is established that the National Government, through the Reserve Fund for the Stabilization of the Mortgage Portfolio (Fondo de Reserva para la Estabilización de la Cartera Hipotecaria - FRECH), will offer interest rate coverage to facilitate the financing of new urban housing that is not Social Interest Housing (Vivienda de Interés Social - VIS). 

This financing will be done through loans granted by credit institutions and Family Compensation Bureaus (cajas de compensación familiar) for (i) the purchase of housing and (ii) housing leasing contracts entered into by credit institutions, except for those granted for the repair, subdivision or expansion of the property, or originated in restructuring, refinancing or consolidation.

This coverage will consist of a financial swap calculated on the interest rate agreed on housing loans or housing leasing contracts, which will be applicable during the first 7 years from the disbursement of the loan or the starting date of the housing leasing contract.

The value of the coverage may vary between 2.5% of the remaining balance of the housing loan or lease contract and 42 monthly minimum wages in accordance with (i) the starting date of the contract or credit disbursement and (ii) the value of the NON-VIS housing.

This value will be used to cover the monthly amount of interest caused on the current principal balance and will be paid to the current interest component of the first 84 monthly payments. In no case shall the amount of the monthly coverage be greater than the amount caused by current interest in the respective month.

Credit institutions and Family Compensation Bureaus shall be solely responsible for verifying compliance with the requirements and conditions established for access, validity, and early termination of interest rate coverage on housing loans or housing leases.

See full text of Decree 1233 of 2020