The Royal Decree on relief measures for economies of Spanish households will come into force on Thursday 24 Novemberalthough there are still many doubts about the medium-term repercussion of this postponement and installments in the payment of mortgage installments.
One of the main doubts is knowing whether the credits making use of this Royal Decree will be considered doubtful or unpaid since theoretically the bank will have to disbursement of part of the credits because they are considered bad debts, as established by the Code of Good Conduct.
As regards the possibility of easing the burden on financial institutions, economic sources underline that, once the Code has been implemented and its effective use has been observed, its impact will be seen in terms of financial concessions. Furthermore, they stressed that the measures for the the middle classes will not imply any element of direct reclassification of receivables as delinquent or doubtful.
However, it’s important to know what is a doubtful loan or a loan in default.
What is a default or doubtful loan
A dubious or delinquent loan is one that has not been paid for 90 days in the installments agreed in the mortgage document. This is due to multiple causes, including economic hardship, job loss, or a company’s lack of liquidity, among others.
This debt, which can become considered uncollectableit causes damage to financial institutions, which lose profitability and the ability to offer other loans to those who can afford it.
On many occasions, before reaching this situation, the the banking institutions have reached agreements with the debtors to refinance the amounts and then continue to pay a lower amount, albeit for a longer time.
Now with the new Royal Decree, all those who use it will not be on that predefined list, called ASNEF.
