The Minister of Economy, Luis de Guindos, presented last week a Code of Good Banking Practices that included, among other points, the dation in payment to liquidate the mortgage in cases of risk of exclusion. However, this “good bank manual”, which will be mandatory for the entities that adhere to it, includes interesting preventive measures that have gone unnoticed but that can undoubtedly be of great help for mortgaged with problems.
These are three points that aim to mitigate the pressure on the payer by trying to generate the least possible impact on the bank , that is, always keeping the payment in payment as the last option (since it is the most desperate, since no one wants to lose their home and the bank does not usually interest him either).
Restructuring of the mortgage
The first step to take a loan is to click PaydayNow website. When a mortgaged person meets the conditions to benefit from the code of good practices and is not yet in the process of execution, you can request a restructuring of the mortgage. This includes measures such as (1) lack of capital for 4 years (that is, paying only interest), an extension of the amortization period (up to 40 years) and reduction of the interest rate to Euribor + 0.25%.
If point 1 fails, this is the way to go. It is about requesting a withdrawal on the capital pending amortization, in order to make the mortgage viable, that is to say, that the quota does not suppose more than 60% of the total income of the family.
It is at this point that the bank will have to assume losses for the first time and take responsibility for its part of the blame for having granted mortgages right and wrong with dubious studies of risk and viability.
If none of the above points works, it is time to ask for the dation in payment. That is, deliver the home to the bank and thus disregard any residual debt.
As we have already said, this will not be possible if the requirements are not met (unemployment, less than 200,000 euros, single housing, etc.) and it will also become very complicated if the mortgage has a guarantee, since the bank will be able to go to it before to apply the dation in payment.
In addition, in case of the consummation of the dation in payment, the mortgaged will have the possibility of staying for at least two years in the property paying an annual rent equivalent to 3% of the outstanding debt. That is to say, whoever is missing for paying 100,000 euros will be able to pay 3,000 euros a year to remain in the property despite having lost ownership of it. This would be equivalent to a rent of 250 euros per month.
In short, it is a good-looking reform, but we still do not have to sing victory: we will have to see (1) how many banks adhere, (2) how they apply it, and (3) what pressure the government has to enforce it.
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