Pay the mortgage It has become the main economic concern of many Spanish families, who see that each month it is more difficult for them to pay the loan payment because it does not stop rising. In the worst case, the situation becomes unsustainable and they begin to go into debt to the point of no longer being able to continue paying for a home. Although the Government of Spain has launched aid for those mortgaged in vulnerable conditions, the Bank of Spain is also aware of this, and recommends that those in debt use some of the solutions they can avail of, such as ‘dación en pago’.
Despite the fact that the European Central Bank is willing to stop the rise in interest rates After ten consecutive increases, what is a fact is that mortgages will not decrease, and the value of the installments will remain around 4.5%. Therefore, deliver the home to the bank which guarantees the loan in exchange for canceling the outstanding debt, becomes an option to avoid bankruptcy.
What is dation in payment for habitual residence?
The ‘dación en pago’ consists of an agreement between the creditor, in this case the bank where the mortgage is held, and the debtor, where the transfer of the property is agreed upon. Habitual housing by the mortgagee in favor of the person making the loan. By accepting it, the banking entities consider the obligation to continue paying extinguished. To benefit from this option, a series of circumstances must be met to make it possible. The Bank of Spain explains what they are:
- That the purchase price of the home meets the imposed limit, with a maximum of 250,000 euros
- That the debtor is at the exclusion threshold
- That the bank has chosen not to apply the debt relief
- That the debt restructuring plan is unviable
- That although the banking entity has initiated an execution procedure, the auction notice has not been issued
- That the request has been submitted within 24 months following the restructuring request or later, for those debtors who have a restructuring plan approved and in progress and “observe their inability to make payments”
- That the home is not burdened with subsequent charges
If these conditions or circumstances are not comply‘dación en pago’ would not be possible.
Mortgages who can request a payment in payment
The payment of a home is regulated by the Royal Decree Law 5/2017 that modifies Royal Decree Law 6/2012 of urgent debtor protection measures mortgages and Law 1/2013 on measures to strengthen the protection of mortgage debtors, debt restructuring and rent, as explained on the specialized portal ‘Iurisnow’. This law in turn has been modified by Royal Decree Law 1/2015 of February 27, known as the Second Chance Law. In order to request dation in payment for property, the same experts list the type of debtors who can manage it:
- Single-parent family with at least two dependent children
- Large family
- Family with a member with a disability of more than 33% that prevents them from working
- Debtor over 60 years of age
- Family with a victim of gender violence
- That there is at least one minor
- That a relative of the mortgage holders who has a disability, dependency or serious illness lives in the house
Furthermore, the loan payment must include multiply the family unit’s income by 1.5 or exceed 50% of the net income of all family members. These must not have other assets or property rights that could be used to pay the debt. If there are co-debtors, they must also comply with the aforementioned requirements so that alternative measures to execution can be applied, such as dation in payment.
Which banks accept dation in payment
The Code of Good Banking Practices that regulates Royal Decree Law 6/2012 of March 9 on the protection of mortgage debtors who do not have resources, establishes a series of measures that banks must facilitate so that the holders of these loans can restructure their debt, if they are in a vulnerable situation. Banks that adhere to this code must then provide alternatives to debtors to avoid foreclosure.
Among these are: granting a period of one month from the execution request and offering a debt restructuring plan. If this is not possible, you may request the removal of the outstanding capital, as long as after the restructuring the quota is greater than 50% of the income of all members of the family unit. When these measures are insufficient, 12 months will be given, a time in which dation in payment may be requested, which if the bank accepts it, the debtor will be released from the obligation to continue paying the mortgage.
2023-10-26 16:58:24
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