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27 Oct 2012 8:42 AM:

This is a fascinating thread and hopefully it offers certain solutions to some.

Sadly however for many who purchased with substantial mortgages over the last few years where the valuations at purchase we high - and so the resulting mortgages were high compared to the assessed value at purchase  - the borrowing is now significantly "underwater" - meaning negative equity.
 
As an alternative to a Dación en Pago, many banks are faced with the choice of whether or not to undertake formal repossession proceedings. These are very costly and at the end of the auction process the bank effectively "buys back" their mortgage lending to enable them to enforce the repossession. Once recovered the bank will then be required to place the property back into its stock of unsold assets and look for a new incoming purchaser.
 
We have had success in assisting banks with a process called a "Posesión Pacifa". To achieve a success here the owner(s) of the property must be willing to accept that they have lost all or the majority of any equity that they introduced when purchasing. With fallen valuations this is a bitter pill that many have to accept.
 
Once back in the bank’s hand by way of this procedure they will invariably internally provision – as they are increasingly obliged to do by Banco Espana/ECB pressure etc - against the value of the property and place it back on the market at a very viable sales price. This can be achieved as the costs of this form of recovery are modest compared to formal repossession.
 
Following a successful sale the rebated mortgage debt - that the bank is willing to accept - will be recovered by the bank and the debts relating to the property (Community Fees IBI and utilities) will be settled in full to ensure that the property is "clean" for a new purchaser.
 
This offers a clean break solution for the borrower and the bank as part of our solution requires the bank to give a Certificate of Discharge to the borrower confirming that there is no long term damage to their credit rating. This results from a discharge of the personal debt for the mortgage and the security offered by the property.
 
We have extensive bank connections at very senior levels and I’d counsel anyone who is in default to consider whether this offers them a more attractive solution. Please remember that a Spanish mortgage is not a “no recourse” product and in simply walking away from the debt you will not leave it behind. For appropriate cases a more structured solution is feasible and should be considered as a viable alternative.
 
Regards,
 
Mark


Thread: Dacion en Pago

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16 Jul 2009 10:05 AM:

Understood but you may have overlooked those who are still perfomring under a PPC on properties that are not yet completed. The advice is simple don't wait for a dispute to arise to make sure that your advice, understanding and files are in good order.

Being based on the Costa del Sol and running a Buyer's Agency, I have been active in the discounted market for a while. The direct from bank/caja or developer prospects are huge, real information is sketchy and purchaser's are still being asked to take a "trust us" approach to their decision making. That's not sufficient for wary clients. Let's see if those of us involved in the market can all raise the bar by transparency, market intelligence and integrity. Demand seems to be returning and it gives us an opportutnity to get it right. 

Best of luck with your endeavours.

Regards,

Mark



Thread: Bank Guarantee

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16 Jul 2009 7:49 AM:

A couple of Golden Rules for all off plan purchasers in Spain:

1. Make sure you or your Lawyer receives - and holds on your file - the original bank guarantees bearing the developer’s and bank’s signature. Any dispute with your developer means you are unlikely to get an original BG once the dispute is underway.

2. Ask your Lawyer to check and confirm to you in writing when, and if, the Bank Guarantee(s) expires and under what circumstances.

3. Ask your Lawyer to ensure that the Bank Guarantee is formally renewed at any relevant point either because it expires before the "legal" completion of the development - BG's are often phrased to expire on the "application" for the License of First Occupation and there is a clear risk of a significant time delay between the "application" and "granting" of the LIFO - or because of further stage payments made by you.

Hope this helps!

Mark

 



Thread: Bank Guarantee

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16 Jul 2009 7:24 AM:

I understand from a couple of developers that "provisional" LIFO's are being issued by Marbell's Town hall in line with what will be the permanent position post passing of the new PGOU. I cannot imagine that this will be acceptable to a mortgage lender, for example, but it does suggest that in relation to the given development that the  Town Hall and the developer have agreed any "compensation" arrangement for any previous planning transgressions.

Love the new EOS look,

Mark



Thread: New PGOU Marbella

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02 Jul 2008 8:24 AM:

Fab - we'll all be there.

With your 2000 plus posts - and my modest 9 - now double figures - I think I may have Post Envy!

M

Thread: EOS Meet

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