- The text, that this Thursday faces the amendments to the hole in the Congress, worsens for the user the interests applied for the delay.
- “The law does not solve almost any of the problems of the mortgaged,” complains Adicae.
- We can amend the entire Mortgage Law and present an alternative text.
- DOCUMENT: Real Estate Credit Bill.
It was going to be the panacea for the mortgaged one, a new law that would demand transparency to the banks and that extended the months of nonpayment before beginning an eviction … but the associations of consumers have discovered some dark points for the client in the Project of Real Estate Credit Law that this Thursday faces its first examination with the whole debate in the Cortes.
One of the most controversial points refers to the interests that the mortgaged must pay for non-payment of their fees. The jurisprudence of the Supreme Court, according to its latest rulings, considers as abusive any late interest that exceeds that resulting from applying two points at the rate agreed in the contract. The new law, however, sets this penalty at three times the legal interest of the money.
With figures, it is better understood. Let’s take the case of a mortgage with Euribor – 90% of variable loans in Spain – and a differential of 1% on that index. It is a very usual case. If he failed to pay his bills, the Supreme Court would limit the price for not fulfilling his commitment to 2.8% interest on the capital to be repaid; that is, two points above the 0.8% resulting from adding the differential and current Euribor (-0.19%).
With the new law, however, that interest would rise to 9% by multiplying by three the legal rate of money (now, at 3%). That is, the client would triple the cost of his tardiness as a payer. ” That interest would not exceed the filter of abuse by any of our courts of law,” they say from Adicae.
The new mortgage law, in this way, would ignore the pronouncements of the Supreme Court in several sentences and worsen the current law. The mortgage standard that now wants to improve, in its art. 114, says that interest on arrears “cannot be higher” at three times the legal rate. That is, it is a maximum. With the new law proposed by Guindos, this maximum limit is established as applicable in all cases of non-payment.
“It is striking that a project that seeks to defend mortgage clients, ends up worsening the current conditions of their contracts, ” says mortgage expert and property registrar Carlos Ballugera. A whole stick for many homeowners who continue to suffer a labor market with more than three million unemployed of which, approximately half, are long-term.
Ballugera, in addition, calculates that the approval of this article “would give to the financial sector 1,840 million annual euros of the consumers”, the reason why it accuses the Government of “arranging” the situation that had been proposed to the bank since the Supreme Court dictated its doctrine in 2015. Customers, according to this expert, now pay about 1,407 million euros [for default interests] and now will pay 3,247 million with the new standard.
Expected to exceed the total amendments
“This law is a clear regression and worsening of the position of the consumer vis-à-vis the lender with respect to the current situation, which is already unbalanced”, Adicae believes since a community directive that was designed sufficiently open for each country to introduce its specific problems and that, however, says the association, ” does not solve almost none of those that arise to Spanish mortgages .”
The Ministry of Economy thinks otherwise. Ensures that the new Real Estate Credit Law – which was approved by the Council of Ministers on November 3 – “reduces commissions and reinforces the transparency of real estate loans” with the aim of achieving “more equitable credits and ensuring a high level of protection to the people who get financing. “
“We do not expect it to have problems to overcome the amendments to the whole,” says the Adicae user association on this law that transposes a 2014 community directive. It should have been approved in all States before March 2016, but in Spain, it has been delayed – partly due to having a failed investiture and a government in office for more than a year – and has caused Brussels to open an infringement procedure. Hence, the Executive is in a hurry to approve the rule and avoid the fine.
The Government has in principle the support of Citizens, PNV, Canary Coalition and New Canary Islands to reject the amendment to the totality that will defend Unidos Podemos and push the rule to continue its legislative path. The wave of modifications would come later when the parties introduce partial amendments. And one of them will be to modify that controversial article 23 that will triple the cost of a delay in payment.
What changes will the new Mortgage Law bring?
1. More deadlines of default before executing a mortgage. The early maturity is the execution of a mortgage loan by a bank due to a default. Until now there were three unpaid bills that activated the bank’s action. The law now extends that term to nine months in the first half of the loan (or 2% of the total loan default) and 12 months thereafter (or 4% of the capital). Some figures that Adicae requires to expand to 8% and 10%, respectively -percentages similar to those that exist in Germany or France- and provided that “the unpaid installments are of sufficient severity in relation to the amount of the loan, I could not attend to it regularly. “
2. It is encouraged to pass the mortgage at a fixed rate reducing commissions. The new law makes it cheaper to change to another interest or early repayment. Commissions for converting a variable mortgage to a fixed rate are abolished after the third year (for all outstanding loans) and those charged for early cancellation of variable mortgages are eliminated after five years or the third, depending on the of what would have been agreed (but only for those signed after passing the law). In the first case (five years), the limit will be 0.25% of the capital paid in advance. In the second (three years) it will be 0.50%. In the case of fixed rate loans, the maximum percentages will be 4% of the amount anticipated in the first ten years and 3% if later. At present, there is no legal limit for fixed-rate loans.
3. Adhesion to standard contracts and free preliminary information. The law will allow the user to adhere to a basic contract with fundamental clauses. The entity must remit this contract to the client in seven days with these basic data -including clauses such as the ‘floor’ or management expenses- and draw a future estimate of their bills based on the evolution of interest rates. In this period, the client must go to the notary of his choice to resolve doubts, confirm that he knows what he signs … and will not pay anything for this procedure.
4. Agents may not collect bonuses for selling more mortgages. The lenders must have sufficient knowledge about the mortgage credit that they grant, they must analyze the solvency of the consumers and the bank will be prohibited from offering incentives to their workers to sell many mortgage contracts.
5. You will not be forced to contract other products. On the other hand, it is prohibited to offer the linked sale of products with mortgages, as in the case of home insurance, except for exceptions authorized by the Bank of Spain or if it is proven that they benefit the consumer. That is, operations in which it is only possible to contract the mortgage loan if it is done together with a series of products are not allowed. Combined sales are allowed, in which the consumer has the option to contract the loan separately or with a group of products. In this case, the entity is obliged to submit two budgets, one that includes the products that are marketed with the mortgage and another without them.