The agency Moody´s informed yesterday that the measures included by the Government in order to reinforce the protection of the mortgaged families harms the investors in bonds guaranteed by mortgages, such as the deeds or the RMBS. This deterioration occurs because the number of assets which can be used as guarantees will be reduced (…). According to the figures of AIAF (fixed interest investment market), the current balance of deeds and liabilities is 429.939 and 203.615 million Euros, respectively.
The Government announced last Wednesday that it will limit the duration of mortgages to a maximum of 30 years. It will also limit the default interest rates, which cannot be higher than three times the legal interest of money, currently at 4%. According to Moody´s, 12,5% of the mortgages in Spain have longer expiration dates than 30 years.
In the case of foreclosures of usual residences, the Government is also contemplating the possibility of canceling the payment of a debt if the debtor pays 65% of the total amount pending during the fifth year after the award of the property after the bid, or 80% during the tenth year. Moody´s thinks that this could increase the number of debtors which “could eventually cancel their debt by handing in the keys of their home”.
This setback appears when several firms were betting on these assets. Goldman Sachs, for example, saw great value in the Spanish securitizations. On the other hand those deeds issued by different firms have experienced a rally of 40% in six months.