June 24, 2021

This is how mortgages will be with the new real estate loan law that Congress votes today | Economy

This is how mortgages will be with the new real estate loan law that Congress votes today | Economy

Neither do they have any sign of approving the obligation for banks to offer linked products that are renewed annually, the increase in commissions for early amortization, the regulation of the so-called green mortgage, and the entry into force of the law 90 days after its publication. in the BOE, instead of 30. Beyond the amendments of a technical nature, whose ratification by Congress does not give rise to doubt, the deputies of the popular group will support a modification proposed by the PSOE, by which the user can choose freely between the clauses of early expiration of their contract prior to the law and the new regime. Your approval is taken for granted.

Spain transposes in this way a European directive on credit contracts for residential real estate with almost three years of delay compared to the term initially established by the EU, and under the threat of a millionaire fine by Brussels.

Amendments with few options to be accepted

These are the main points of the bill that can be modified.

Tax on Documented Legal Acts. The AJD, which is paid to formalize a mortgage, created a big stir this fall, when the Supreme Court, with a controversial decision, reversed a sentence that it had pronounced previously, and dictated that had to pay for the client and not the bank. The Government then approved a decree by which it must be the financial entities that pay that tax. An amendment of the PP approved by the Senate establishes that, when what is mortgaged is a first house, the rate is "equal to zero", which would be tantamount to suppressing the tax.

Although Citizens will vote in favor of this amendment with the PP, Gonzalo Palacín, rapporteur of the project for the PSOE and spokesman for his group in the Economic Commission, says he is convinced that it will be knocked down. "It is a tax that goes to the Autonomous Communities and we do not understand why, just now that the banks pay, this type has to go to zero," he says.

Linked products A common practice that banks have used so far to reduce the spreads of variable interest rates is to sell the customer a linked products such as insurance. In general, the new regulations prohibit it, although it states that the bank may require that its client subscribe some insurance such as the guarantee of compliance with its obligations or the damage to the mortgaged property, among others. If this were the case, the financial institution would commit, however, to accept the alternative policies proposed by the client and that have equivalent conditions and benefits.

Through some amendments of the groups of the PP and Mixed, the Senate added the obligation, by the financial institution, to offer the possibility of contracting policies that can be renewed annually. On the contrary, since the PSOE understand that a policy is better for the life of the loan. "The single premium is not harmful to the consumer, but would protect him," says Palacín.

Even if the amendment is rejected, the law foresees that in each renewal the client will have the faculty to propose alternatives, for whose analysis the financial institution will not be able to charge any commission. If you accept the offer of an insurance provider proposed by the client, this will not be a reason to make the loan conditions worse. The entity that lends the money may also link the mortgage to the credit holder, spouse or domestic partner, or a relative, hire certain financial products authorized by the Ministry of Economy, "provided they serve as operational support or guarantee to operations and that the debtor and guarantors receive accurate and detailed information "about them.

Early repayment of a fixed mortgage. The holder of a fixed rate mortgage may wish to amortize his debt totally or partially in advance, in order to obtain a reduction in the cost of the loan (capital to be repaid, interest and other expenses such as linked insurance). In this case, the legislator establishes two types of commission to be charged for it, according to the period of the contract in which the client returns all or part of the borrowed money in advance. If you do it in the first 10 years of validity or from the day that the fixed rate is applicable, the commission will have a limit of 2% of the capital repaid in advance. If the early amortization was made at some later time, the limit of the commission would be 1.5%.

Another amendment of the PP approved by the Senate would raise these percentages to 4% and 3%, respectively. "It's about defending the consumer and we do not understand the change of position of the PP, because in Congress these committees had also agreed with them," Palacin misses.

Execution of the mortgage. In order for the bank to be able to execute the mortgage, that is, to terminate the contract in advance with respect to the term foreseen and obtain the asset as collateral for the loan, the owner must have stopped paying their installments. Currently the default threshold is placed in three installments, although the CJEU already determined that the unpaid amount should be more important so that the early maturity of the mortgage could begin.

Thus, the new amounts provided by law they are 3% of the capital granted or an amount of money that corresponds to 12 monthly installments, if the delay occurs in the first half of the duration of the mortgage; and 7% of the loan or the equivalent of 15 monthly payments, when the default occurs in the second half.

Although the law explicitly provides that its rules are not applicable to contracts signed before its entry into force, these amounts will be used in old loans that contain specific clauses of early maturity. An amendment of the socialist group approved by the Senate leaves it up to the debtor to determine if these clauses contained in his contract are more favorable for him or prefer to benefit from the new regime. It is practically the only one of the relevant amendments that may come out ratified by Congress, since the PP, through the mouth of its rapporteur on this project, Miguel Angel Paniagua, has announced the vote in favor of his group. On the contrary, Rodrigo Gómez, of Ciudadanos, assures that his party will vote against: "I do not know any clause of anticipated expiration that improves the conditions of the law", he says.

The real estate credit law also requires the bank to formalize a payment request to the debtor, granting it a term of at least one month.

Green credit Through an additional provision proposed by the PP and approved in the Senate, the figure of the green credit would be regulated, that is to say a mortgage that is granted for projects of improvements in energy costs, purchase of long-term energy and works to obtain high qualifications in the certificate of energy efficiency of buildings under construction.

"As a philosophy we can agree, but we believe that it is not the place or the time to regulate it, but we have to do it more broadly and peacefully", summarizes Idoia Sagastizabal, rapporteur of the project for the PNV in the Congress. A position shared by both the PSOE and Citizens.

Entry into force Another amendment proposed at the initiative of the popular and mixed group is that the new law comes into force three months after its publication in the Official Gazette, except for transparency rules (among them, information on the distribution of expenses) and verification of compliance, for which a regulatory development would be necessary. Ferrán Bel, from PdeCat, has announced the vote in favor of his party.

However, it is very likely that the deputies decide to return to the original text, whose entry into force is set at 30 days after publication in the BOE, except the rules on the remuneration of personnel dedicated to the sale of mortgages, the activity of advice on real estate loans, and variations in the interest rate (among them, the provisions on land clauses and the characteristics that the benchmarks should have). These would begin to be effective three months after publication.

Sagastizabal explains that the PNV rejected the amendment of the PP for the requirement that banks "adapt with the same timeframe as other agents." And remember that the threat of sanctions by the EU is still valid if it delays the entry into force of a regulation that Brussels has been waiting for years.

The aspects that do not change

These are the other main points of the law, which in no case will be modified.

Distribution of expenses. The new regulations explicitly establish who is responsible for paying the expenses related to the mortgage. Except for the appraisal, which the loan holder has to pay, all others are borne by the bank: agency, notarial fees for the deed, registration in the property register and AJD tax (which, in the case of a first home, would be eliminated, if the Congress accepted the aforementioned PP amendment).

Opening commission. According to the new law, the bank can charge a commission only for services actually rendered or expenses that can be accredited, and only if they have been requested or accepted by the client. When an opening commission is agreed between the lender and the borrower, it must include in a single payment "the total cost of study, processing or granting of the loan or other similar". In the case of a mortgage in another currency, this commission will also include any charge for the change of currency in the initial outlay.

Early repayment of a variable mortgage. As in the case of a fixed-rate loan, in the case of a variable mortgage the holder will pay a commission to amortize it in advance. The law establishes that the entity and the client can negotiate the amount of this commission, but with these limits, mutually exclusive.: or up to 0.15% of the capital reimbursed in advance, if the anticipated reimbursement was made during the first five years of the contract, or up to 0.25% if it was made during the first three years. "In different cases" to these, the bank "may not collect compensation or commission for reimbursement or full or partial early repayment," reads the regulation.

Interest in delay. They are the interest that the bank can charge on the loan capital that the client has stopped paying. The Supreme Court, judging excessive the default interest that was usually agreed in the mortgages a few years ago, and that could reach up to 25%, ruled that these could not be above two percentage points of surcharge on the interest rate agreed in the contract. Now the law establishes that the interest for delay will be the interest of the loan "plus three points".

Floor clause. The new law establishes that "in transactions with a variable interest rate, a limit may not be set for the downgrade of the rate", thus closing the door to the return of the so-called floor clauses, which the courts have annulled as abusive on many occasions. In any case, to prevent an entity from paying to lend money, the regulations also state that "the remunerative interest can not be negative". That is to say, when the benchmark index (such as the Euribor) is negative and if it exceeds the differential that is charged.

Likewise, the new law decrees that the reference index to which the loan's cost is adjusted must be "clear, accessible, objective and verifiable by the parties," and must not be "susceptible to influence" by the entities. It seems evident the legislator's attempt not to allow the use of benchmarks such as the IRPH, whose supposed lack of transparency and permeability to manipulation are now subject to the judgment of the Court of Justice of the European Union (CJEU).

Multi-currency mortgage. The holder of a loan can convert it into an alternative currency that is the currency in which he receives most of the income or has the majority of the assets with which he repays it, or that of the member state in which he was a resident at the time of signing or the conversion request. The exchange rate with the euro will be, initially, that of the ECB on the date of application, unless the contract provides otherwise. The bank will be obliged to inform the client periodically of the increase that may have occurred due to the exchange rate and the applicable mechanisms to reduce this risk. In any case, you will have to do it every time the quota differs by more than 20% of the amount that the client would have paid if the exchange rate in effect on the date of the signature had been applied.

Application of the law. To avoid any doubt about the possible retroactivity of the new regulations, the text of the Real Estate Credit Act makes it clear that this will not apply "to loan agreements signed prior to its entry into force", with the important exception, indicated, of those that contain clauses of anticipated expiration. The principle of non-retroactivity will also be repealed in the case of novation or subrogation that intervenes after the entry into force of the new regulations.


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