THERE WILL BE THE NEW MORTGAGES

The Council of State makes legal and clarification recommendations. The preliminary draft will soon go to the Council of Ministers. The Ministry of Economy already has the opinion of the Council of State on the preliminary draft Law on Real Estate Credit Contracts, which was approved by the permanent commission in September. The report is favorable and basically carries out legal considerations, as EXPANSION has been able to know. For example, the agency suggests that the wording of the text be clearer in the section on the prohibition of related mortgages. From now on, no financial institution will be able to force to contract with her a certain insurance to grant a mortgage. Instead, it is possible to reduce the interest rate applied if the customer contracts several products with the bank, a practice widely used in Spain.

The Council of State also suggests to the Government to explain better the implications of the new law for the self-employed.

Transposition

The preliminary draft is only in the absence of its approval in the Council of Ministers. From there, the parliamentary process will begin. The objective of the Government is to enter into force before the end of the year.

This new standard is driven by the need to transpose a European directive. The deadline to adopt it in national legislation expired in March 2016. Spain was already aware of this delay by the European Commission before the EU Court of Justice.

The spirit of the directive is to advance the achievement of a single market for mortgage loans, increase consumer protection and reduce foreclosures. Following the judicial problem created by the land clauses and other abusive mortgage clauses, the Government wanted to take advantage of the update of the standard to raise the requirement of transparency in the credit contracting phase.

The final text of the preliminary draft has proved to be more decaffeinated than the initial drafts.

The biggest news is that two client visits will be necessary to the notary or property registrar before signing a mortgage, without raising the cost of their services. The first visit will be advice. It will have as object to inform the consumer of all the problematic clauses that the contract has and to resolve its possible doubts. The notary must ensure that the contract does not contain any of the abusive clauses included in the so-called General Register of Conditions of Contract.

The directive obliges banks to rely more on the consumer’s ability to pay than on the present or future value of the home they are acquiring. According to Economía, the new demands do not have to make future loans more expensive.

The Spanish transposition, according to the preliminary draft, requires the bank to break down in the contract the costs of formalization that entails the mortgage -notary, registration and the Tax of Documented Legal Acts– but not specify who should pay them, if the financial institution or the future mortgaged Leave it to the negotiation of the parties. A pronouncement of the Supreme is awaiting.

The law does not address payment in payment, which is regulated in the civil legislation of each country. It also maintains the obligation that the mortgaged person must respond to their debts with present and future assets.

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