According to data from the Bank of Spain, until February 28, financial institutions had granted 1.4 million mortgage and non-mortgage deferrals, with an outstanding balance pending amortization of 55,252 million euros. But among all the yeses, there have also been many denied. Specifically, there are 126,087 applications that have not been approved.
However, there is a second way to be able to deal with unaffordable mortgage debts: to take advantage of the 2012 Code of Good Banking Practices, which offers a way to alleviate the economic and social situation of families on the threshold of exclusion with difficulties to pay the dues. That is to say, those whose income does not exceed the limit of three times the Public Multiple Effects Income Indicator (IPREM), which for 2021 stands at 7,908.60 euros, so that the set of income cannot exceed 23,725 euros year.
Also considered in this situation are families whose mortgage payment is higher than 50% of net income; that their economic situation has altered in the previous four years to the point that the mortgage burden on family income has multiplied at least 1.5; or that family circumstances of special vulnerability have arisen, such as being a large family, a single parent with two dependent children, a family unit with less than three years of age or with a member with a disability greater than 33% or a debtor older than 60 years.
For Miquel Riera, Mortgage expert of the financial comparator HelpMyCash.com, in the case of those debtors who have specific economic problems and consider that they will recover once the coronavirus passes, the moratoriums offered by the Government are the best option. In this case, it is required that the mortgage payment together with the basic supplies is equal to or greater than 35% of the net income of the family unit or that the alteration of economic circumstances has caused the mortgage payment to have multiplied by at least 1 ,3.
But if the economic problems caused are more serious, or it is expected that they will continue over time, for the expert the best solution is to adhere to the Code of Good Practices.
“With the measures of this code, those who have financial problems can restructure their mortgage to pay less during the next five years, which gives them time to recover,” explains this expert. Thus, in the event that they cannot continue paying, it gives them the option of “reducing the debt or obtaining the dation in payment of the house, with the possibility of continuing to live in the same property for a few more years,” says Riera. . The option to “donate” the home is the last resort contemplated by the code. Before, you have to go through two other preliminary phases and both will have had to be denied or deemed insufficient, as recalled by the Bank of Spain’s Department of Conduct of Entities. Specifically, they emphasize that the three phases of this regulation “are necessarily consecutive.”
In a first phase, an attempt is made to restructure the mortgage debt. According to the public entity, the modifications must be, at least, of a capital deficiency for five years, an interest rate of Euribor plus 0.25% during the grace period and an extension of the mortgage term to 40 years .
If this is not feasible and the monthly payment continues to be greater than 50% of the family income despite the restructuring, the debtor can request a write-off on the entire debt, although the financial institution is not obliged to accept it.
If these two solutions are not enough, the code establishes as the last option that the debtor requests, within 12 months from the restructuring request, the dation in payment of his home. In this case, “the family may remain in the home for a period of two years as a tenant, satisfying an annual rent.”
To access these measures, “the debtor has to contact his bank and communicate his intention,” says Riera. After doing so, the entity will ask you to provide several documents to certify that the requirements mentioned above are met. The bank has a period of up to one month to issue a response. If you accept the request, the corresponding measures will be applied. And if you don’t, you will have to explain why.
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