The Government has included a clause in the Code of Good Practice for shield the mortgaged that they take advantage of the aid plan against the vulture funds. In this way, when a bank approves applying to a client the relief measures approved on Tuesday by the Council of Ministers, these will be maintained even if the entity sells the mortgage to a third party.
“The obligation to guarantee the safeguarding of debtors’ rights in the case of assignment of credits to third parties is incorporated as a new obligation for member entities, which is configured as an obligation of organization and discipline, to avoid the vulnerability of families vulnerable in the event of the sale of the mortgage loan portfolios to a third party”, indicates the text of the royal decree-law, published this Wednesday by the Official State Gazette (BOE).
The sale of doubtful loan portfolios to investment funds It is a common practice for banks to clean up their balance sheets, since they are considered toxic assets that consume capital. Given that these funds will not be able to adhere to the Code of Good Practices (only entities that offer mortgage loans in Spain can do so), the Executive has ensured that clients do not see the relief measures in the payment of their mortgage payment interrupted. In fact, according to sources familiar with the negotiations, the first vice president, Nadia Calviño, wanted this clause to be applied retroactively, to portfolios already transferred.
This is a relevant clause, since fForms part of the measures to expand the Code that was already in force (approved in 2012) and it will be applied permanently for those mortgaged who take advantage of the aid plan. In the case of mortgages that are under the new protocol for the middle classes, which has a transitional validity of two years, the measures will be maintained during that period.
The financial sources consulted explain that from now on the funds interested in acquiring doubtful portfolios made up of mortgage loans will have to recalculate the profitability they can obtain, taking into account that they must maintain the relief measures.
Habitually These types of assets already carry a significant discount on face value, which can reach up to 90% in the most extreme cases, given that there are doubts about the recoverability of the investment. However, the entities prefer to pocket a small amount of these credits as long as they do not allocate resources to their collection.
full agreement
The Council of Ministers approved this Tuesday a package of measures aimed at easing the mortgage burden on vulnerable groups and the middle classes at risk of vulnerability due to the accelerated rise in interest rates by the European Central Bank (ECB). Although the Government announced a principle of agreement on Monday night, the bank warned the next morning that there were still issues pending to be resolved before deciding whether to adhere to the plan or not.
Financial sources explain that the agreement is complete and they detail that this pending point was related to the level of provisions that the banks that apply the relief measures must provide. Thus, they explain that the wording of the final text has undergone a key modification so that the financial institutions end up giving their approval to the agreement.
In this sense, they detail that when a bank applies deficiencies in the payment of a loan, a loss occurs for the entity. If that loss is 1% or more, banks are required to classify those loans as doubtful or stage3, which implies making high provisions. If the loss is less than 1%, the credits are classified as under special surveillance or stage2that although it also requires provisions, these are lower.
The initial text of the package of measures provided that during grace periods the reduction would be that 1% and it was finally modified to 0.5% in its final wording to limit the allocation of provisions by banks. “The interest rate applicable during the grace period will be such that it implies a reduction of 0.5% of the net present value of the loan, in accordance with current regulations,” reads the royal decree-law published in the BOE. I know This is an important issue for families as well.since when an individual enters the list of defaulters, their access to credit is restricted in the future.
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