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Article copyrighted © 2019. Plagiarism will be criminally prosecuted.
By Raymundo Larraín Nesbitt
Lawyer - Abogado
11th of May 2019
The last time I wrote on this subject was last November, New Mortgage Law to be passed, in which I wrote Congress was on the verge of approving the long-awaited EU Directive on Mortgage Law. Spain has had to wait for over 3 years to transpose this EU Regulation and only under threats of steep fines has it finally been approved.
As I mentioned back then, the most significant impact it will have is to push back the timeframe of bank-led repossession periods, from the current 3 months to 12 months, or more.
Back in 2009, when I wrote my article on Spanish Mortgage Loans: Beware of Abusive Clauses, I included as point nine the abusive and one-sided power lenders had to foreclose on a mortgage loan on defaulting only ONE instalment (that is, one month in arrears). I will self-restrain myself to avoid using harsh language, but it was totally bonkers. As I wrote at the time, there were a myriad legitimate reasons on why a borrower could miss out on repaying only one mortgage instalment.
After the property bubble imploded in 2008, and hundreds of thousands of bank repossessions were executed in Spain leaving bereft hundreds of thousands of young families, the goal posts were mercifully moved to a 3-month repossession waiting time. Any lender would now need to wait 3 months of unpaid arrears before they were allowed to call in a bank loan.
Fast-forward to the 21st of February 2019, when Spain’s Congress finally approved the new EU Directive which forces lenders, amongst many other changes, to wait for 12 months before being allowed to instigate a full-blown repossession procedure on an unserviced mortgage loan.
It is most disappointing – once again – that the European Union has had to step in decisively to look after Spanish consumers and borrowers and quash abuses from our unbridled financial sector (which we bailed out during the last bank meltdown, btw). If only some of our political class had backbone, this intervention would be unrequired.
On a completely unrelated note, I guess those multi-million pound loans from the banking sector to ALL Spanish political parties (which are never repaid and are always condoned) must have some sort of consideration in exchange.
Gosh, I wish I could just walk into a bank any morning and ask for a 60 million euro loan (offering no collateral) and then have my lender kindly condoning me the debt after a couple of years for no apparent reason, bless their warm hearts. But I guess you’d need to stoop down and become a career politician for that to work out. Too high a price, I guess.
Spain’s new mortgage law comes into force next 16th of June 2019. It will greatly alleviate struggling family’s finances, greatly bolstering consumer & lender rights.
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