The Chamber of Deputies gave half a sanction to the bill that tries to create a system that proposes to address the situation of debtors of UVA mortgage loans. A very hackneyed subject, but one that few truly understand in depth.
The UVA has been strongly demonized by the current government. Already during Alberto Fernández’s campaign, there was talk of ending the “UVA credit scam” and – in his proposal for the first 100 days of government – it was established that he was going to “comprehensively review its operation.” However, in 3 and a half years nothing was donewe are in the worst moment in terms of access to credit in the last 80 years: the entire stock of housing mortgage credit represents only 0.2% of GDP.
The debate in Deputies revolved around several projects, presented by different political spaces, finally voting for one whose main promoter was Deputy Julio Cobos. However, the underlying question is whether the Compensation Trust Fund created in the current voted project solves the problem that high inflation has generated in the UVA system.
Before proceeding, it is necessary to clarify that The main problem we have today is the drop in real wages and inflation, which makes it increasingly challenging for families to pay the fee.
To our knowledge, creating a compensation fund is a correct solution. Conceptually, the idea of establishing an instrument that allows, broadly speaking, that the installments of UVA mortgage loans adjust according to the evolution of wages and no longer due to inflation; is correct. Now, the issue is how this is achieved.
The system voted in Deputies proposes that quotas be adjusted according to RIPTE (salaries), except when the accumulated increase in salaries is higher than inflation. If inflation grows more than wages, they pay according to the increase in wages. If wages grow more, they pay the fee adjusted for inflation.
That is to say, at times when real wages fall, they will pay less than quota. That difference will be put by the fund created, which will pay the banks only when that difference exceeds 2%. What is known as an “asymmetric” system, a complicated solution that forces the financial system to redo a whole complex engineering.
In our opinion – and this is what we proposed in the bill that we presented in 2022 – the fund to be created should be “symmetrical”, thus guaranteeing the sustainability of the mortgage system, not scaring away the offer, nor generating legal uncertainty that later makes it difficult to future mortgage credit market.
Basically, What we propose is a system in which the debtor always pays a fee adjusted for wages, plus a premium of between 1% and 1.5% of the same and forgets about inflation. And the banks always charge a UVA fee and everything remains the same.
But where we clearly do not agree is that the fund in question be solvent with the contributions that the banks will have to make (0.0025% of the average daily balances of the system’s deposits). Which is equivalent to saying that we are all going to pay it with our deposits, whether we are borrowers of a UVA mortgage loan or not.
A solution that seems clearly unfair and that is where the strong criticism that the banking entities (ABA and ADEBA) have made of the voted project lies. It is essential that the path chosen does not create disincentives for the existence of new credits in the future.
It is clear that the damage that inflation has caused to all the variables of our economy cannot be ignored. UVA mortgage loans are one more victim of this. That is the real scam.
But neither can it fail to point out that the debtors are far from having lost in the equation (they are not before Circular 1050). Their homes, valued in dollars, are currently worth considerably more than the debt they owe to the bank. They are owners, before they were not, and the rents have increased above inflation (that is, above the UVA).
Nor do we believe that the solution offered to extend the term of the loan so that the income ratio does not exceed 30% of income, is an option that mortgage debtors will take. This term extension alternative was also originally offered in the Central Bank regulation that created UVA credits in 2016 and, in fact, it did not end up representing a real relief in the debtors’ quota.
Finally, In the absence of a systemic crisis, default on UVA mortgage loans is less than 2% according to data from the Central Bank as of April, well below the system -3.3%- and any other line of credit; It is unnecessary and counterproductive to re-introduce another suspension of foreclosures, auctions and other judicial actions that do nothing more than blow up the legal certainty that the stability of contracts needs in our country to attract resources again.
The macro is the boss. Only by stabilizing the macroeconomic variables will we be able to lower inflation, return to having a currency and promote the development of a sustainable mortgage credit market that allows, as in almost all countries, the dream of owning a home to come true again in our country.
The trial balloons that hinder the system bring countless problems to the normal functioning of the markets. The Rental Law is a faithful reflection of this.
The enormous structural housing deficit that our country suffers makes it impossible for it to be solved only by building houses with public resources. We need to recover a robust and mature mortgage market. State resources have to be used to subsidize the rate or the capital of millions of mortgage loans that allow families to access their first home again. That must be the way.
Let’s not put patches again. Let’s strengthen the credit tools that already exist and that can facilitate access to housing for millions of Argentines who need that dream to become a reality in Argentina again.
The author of the note is former Secretary of Housing of the Nation (2015/19)
