The Ministry of Economy has published the preliminary draft Law regulating real estate credit contracts with which limits the fees to be charged for these loans and the remuneration of real estate lenders, among other measures.
The regulation, which will be in public hearing until September 15, involves the transposition of Directive 2014/17 / EU of the European Parliament and Council on credit agreements concluded with consumers for real estate for residential use.
The text emphasizes that the lenders, the credit intermediaries and the representatives designated for the granting of the real estate loans “will act honestly, impartially, transparently and professionally, respecting the rights and interests of the borrowers”.
These principles must be fulfilled both in the preparation of credit products, as in the granting of credits, in the provision of intermediation or credit counseling services or, where appropriate, ancillary services, such as the execution of contracts of credit. He also insists that the information obligations in favor of the borrowers “will not entail any additional cost”.
The regulation sets out a series of transparency elements that mortgage contracts must comply with, including the need to state “explicitly and with the utmost clarity” the rights and obligations of the parties, as well as the risks arising from the loan.
Special attention must also be paid to the fact that the clients’ income is in line with the commitments they acquire upon receiving the loan, as well as that there are no “undue influences” of the entity or its subsidiaries in the valuation of real estate guarantees.
LIMIT TO THE COMMISSIONS
Regarding the fees charged for these services, the text states that only expenses for services related to loans that have been requested in a firm or expressly accepted by a potential borrower or borrower and provided that they respond to services rendered or expenses that may be can be accredited
On the other hand, the opening commission will include all the costs of studying, processing or granting the loan. In the case of loans denominated in foreign currencies, the opening commission will include any commission for currency exchange corresponding to the initial disbursement.
The text makes clear that the interest rate of the loan can not be modified “to the detriment” of the client during the term of the contract unless agreed upon by the parties and formalized in writing.
EARLY EXIT OF THE LOAN
If the borrower wants to terminate the contract, he may do so “at any time prior to the expiration of the agreed term” by means of a refund or early amortization of the amount owed. The parties may agree on a period of prior notice that may not exceed one month.
The bill specifies that, in this case, the borrower “will be entitled to a reduction in the total cost of the loan that will include interest and costs corresponding to the contract time that remains to expire until the time of termination.”
NO AMORTIZATION COMMISSION FROM THE SIXTH YEAR
Specifies that if an insurance contract had been signed accessory to the loan both must be extinguished at the same time and the borrower will be entitled to receive the part of premium not consumed.
In addition, the lender may not collect compensation or commission for reimbursement or full or partial early repayment of the loans but may receive compensation – limited to 0.25% during the first five years of the contract and 0.5% during the first three years– in the case of financial losses.
The regulation establishes that the personnel at the service of the lender must have the necessary knowledge and skills on the products that it markets and details that linked sales of loans are prohibited unless they are beneficial for the client.
It also specifies that the remuneration policy for real estate lenders must be compatible “with sound and effective risk management” and “will not offer incentives to assume risks that exceed the tolerated risk level”.
Remuneration must be consistent with the business strategy, objectives, values and long-term interests of the lender and must incorporate measures to avoid conflicts of interest, in particular establishing that the remuneration does not depend on the number of applications accepted.