On 17 July 2009, the Russian President signed Federal Law No. 166-FZ amending the Mortgage Law. The Law will enter into force on 2 August 2009.

The amendments extend the operation of the Mortgage Law rules, which allow mortgagors of residential premises to insure their liability for failure to repay the loan, to mortgagors of any immovable property (such as buildings, office premises, warehouses and so on).

The amendments also clearly provide that if a mortgage holder chooses to enforce the mortgage by acquiring the mortgaged property for itself (or for a third party) and setting off its purchase price against the secured obligations, such purchase price should be determined based on the market value of the mortgaged property.

Finally, under the amendments, acquisition of a building with borrowed funds results in establishing a statutory mortgage, not only over a land plot underlying such building, but also over the building itself. Similarly, acquiring non-residential premises with borrowed funds will establish a statutory mortgage over such premises.