Lawyer Raymundo Larraín gives us a light-hearted take on Spain’s new mortgage loan lexicon.
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Article copyrighted © 2020. Plagiarism will be criminally prosecuted.
By Raymundo Larraín Nesbitt
Lawyer - Abogado
1st of February 2020
You’d be excused if you’ve misread Flipper (the dolphin) or if you thought I’d be rambling on about some new trendy street band of young Irish heartthrobs wooing teenage hearts. Alas, no. It turns out these fancy new F-worded acronyms have become quite the buzz word in the mortgage world; I know, sadly not as exciting as the prospect of talking about glam upstart rock bands but a man has to make a living.
These acronyms have fast become ubiquitous over the last year and you will often hear them spoken out at notaries by suits with knowing glances being exchanged. With this in mind I’d thought I’d write up a short blog post defining each one.
So, next time round you hear them spoken aloud, you can impress your acquaintances on asserting your mastery on Spanish mortgage-lending terms.
Stands for Precontractual Information Pack (Ficha de Información Precontactual, in Spanish). All this fancy-worded acronym means really is just a general review of a mortgage loan’s terms and conditions. It should be stressed it is not binding and it is not personalised. The lender is at liberty to alter the advertised terms and conditions at any time without giving notice. Its usefulness comes into play on being used as a tool to compare other lender’s offers (FIPFREs), that’s all.
This one stands for European Standardized Information Pack (Ficha Europea de Información Normalizada, in Spanish). This one is similar to the above, laying out the terms and conditions of a mortgage loan, but unlike the former it is actually contractually binding and is personalized for a prospective borrower. A FEIN is now the equivalent of what we understand in English as a lender´s Binding Offer and is time-limited (normally spanning 3 months). A lender, following new laws, is compelled to supply a borrower with at least 10 days in advance a copy of the FEIN before signing the Mortgage deed at a Notary. It includes useful information such as ‘portability’ of the loan to other lenders, how to desist within 14 days or how to make partial redemptions of the loan.
The final one stands for European Standardized Warning Pack (Ficha Europea de Advertencias Estandarizadas, in Spanish). If it sounds scary, it is because it is meant to be. It is a mixed bag where they throw in all the common mortgage abusive clauses, official benchmark indexes to which a loans is indexed, early redemption penalties etc. Basically, it provides an overview on all the conflictive points which caused borrowers so much aggravation in the not-so-distant past on taking out mortgage loans in Spain. You’d do well to acquaint yourself with them before blissfully signing away your life on the dotted line.
The afore constitutes a prime example of a EU-led initiative devised to bolster borrower’s and consumer’s rights, handholding them in the aftermath of the 2008 subprime bank meltdown which resulted in hundreds of thousands of Spanish families losing their homes on being repossessed.
It is only fit and proper that EU lawmakers take an active interest in our mortgage woes given how our local overlords are all-consumed with domestic separatist affairs and petty power squabbles between conservatives and progressives.
These new terms, and many others, have been recently introduced by Spain’s New Mortgage Act in March 2019, which in turn is a transposal of a European Regulation from 2014 devised to raise awareness, shed light and facilitate the comprehension on complex mortgage lending terms allowing laymen to understand (here’s hoping) when they sign up for a 20-year mortgage loan. This new well-meaning regulation, which at times goes out of its way to protect consumers to the point of being counterproductive, has been enacted to avoid repeat scenarios like the 2008 property bubble collapse ensuring the protection of young families (mainly from themselves) and avoid them losing their homes.
Well, so goes the theory anyway.
Spain’s new mortgage law came into force on 16th of June 2019. It will greatly alleviate struggling family’s finances greatly bolstering consumer & lender rights.
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