Government will finish in coming days a substantial reform of mortgage market in order to protect borrowers from the wave of foreclosures of last years.
The idea is "to improve the position of the debtor", dramatically lowering interest for late payment of mortgages on first residences, which may not exceed the legal interest (now at 4%) plus a surcharge of two points percentage. That is, at most 6%, compared to the average 20% that is being currently charged. There will also be time limit as interest will be guaranteed with the house just for three years (against current five years).
This change has been encouraged by 47 dean judges in Spain
In addition, the proposal currently includes provision 115 or Mortgage Act to be suppressed: legal right of the mortgagee to require the extension of the mortgage to debtor in order to secure interest due and unpaid.
The proposal also includes an out of Court procedure for the sale of the propertywhen the debtor defaulted mortgage.
How? At any time prior to the conclusion of the auction, the debtor may bring a buyer to Court paying at least the 70% of the appraised value for auction of the property.Once the Bank is notified, this will have "a period of 20 days to either bring a buyer paying a higher amount or repossessing the estate at that price putting an end to the procedure” Auction valuation presented by the debtor prevails over that made by the Bank.
Doors opened for the debtor to sell the house he cannot keep paying: this way, a private sale or private auction is possible. Anyone paying 70% of this valuation needs to be accepted by the Bank.
Previous posts on dation:
http://www.eyeonspain.com/blogs/costaluz/8218/legal-tip-849--dation-and-balance-vi-a-claim-by-judges-association.aspx
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"Nunca pares", Port of Barcelona, North-east of Spain, by Reina Cañi, at flickr.com