Banks will not be able to establish the early maturity of a mortgage until the non-payment by the consumer supposes 2% of the loan, including interest, during the first half of the contractor 4% in the second part of the same, as stated in the Proposed Draft Law Regulating Real Estate Credit Contracts.
In this way, the Government establishes a threshold from which the bank can decree the early expiration of a loan and execute the mortgage, since with the current system it is possible to foreclose the loan from the third month of default, according to informed sources from the Ministry of Economy, Industry, and Competitiveness. The draft of the new mortgage law also establishes that the default interest will be, at most, three times the legal interest of the money.
Likewise, it will facilitate the conversion of the mortgage loan in foreign currency to another currency, as well as the change of mortgage loan with variable interest to fixed interest, since the commissions for compensation for interest rate risk will be limited.
In addition, in the case of variable rate mortgages, the early redemption fee will be limited to 0.5% in the first three years, from the third year to the fifth year it will be 0.25% and thereafter it will be eliminated.
As for fixed-rate loans, the early repayment fee will be 3% maximum in the first four years and 4% thereafter. Thus, it is considered that the risk is greater for the bank in the case of a fixed rate loan than in the case of a variable rate loan- main page.
The percentage of the commission for early repayment will always be applied to the amortized capital, as explained by the same sources, which have qualified that, in any case, the compensation to the entity cannot be greater than its financial loss.
On the other hand, the standard will include the possibility for both parties to voluntarily adhere to a standard contract in which the fundamental clauses of the contract are established. The preliminary draft of the mortgage reform, which is sent to the Council of State on Monday, will apply to all natural persons, that is, those who carry out business activities, such as self-employed workers, will be included.
NO INCENTIVES TO BANKING EMPLOYEES FOR MORTGAGE CONCESSION
The new norm will demand that the intervenors in the granting of a mortgage credit have a professionalization and a training to offer all the information required to the consumer and evaluate their solvency situation while prohibiting the banks from offering incentives to their workers for the granting of a certain number of contracts.
On the other hand, the sale of packages of products linked to mortgages, such as home insurance, will be prohibited. As explained by sources of the Ministry, there can be no related operations unless it is shown that they are beneficial for the borrower and that they will be established by the Bank of Spain.
THE CONSUMER GOES TO THE NOTARY TWICE
The mortgage reform will increase, in addition, the sanctioning regime to notaries and registrars, since there will be new infractions as a result of the incorporation of new control obligations.
Specifically, when signing a mortgage loan, the consumer must receive from the bank not only a standardized information sheet with the main characteristics of the contract but also a standardized one with warnings in which sensitive clauses are included, such as clauses floor.
In addition, this sheet should include estimates with various scenarios of variable interest rates, a copy of the contract and disaggregated information on which part should pay each mortgage expense. The rule does not establish to whom each expense corresponds, but both parties must agree to it.
Afterward, the consumer must go to the notary of his choice, who will verify that he has been given all the obligatory information and that he has done it in time while answering all the questions he asks and explaining the sensitive clauses of the contract. The borrower must sign a certificate in which he shows that he knows all the necessary information.
Later, the consumer will go with the bank to sign the contract before a notary and both the registrar and the registrar can not authorize the signing of the deed if all the obligations are not fulfilled or if the contract has clauses considered abusive by final judgments.