Banks´Gateway to Free From Troublesome Mortgages

18/03/2014 – Cinco Dias

The majority of the Spaniards, in spite of everything, continue to pay-off their mortgages scrupulously. At the end of 2013, mortgage deliquency post 6.5%, juxtaposed with the 13.6% content of the banks´portfolios. However, the Minister for Economic Affairs wishes the toxic assets would disappear and urges entites to cleanse their balance sheets, mainly through converting the mortgages into debt and putting them up for sale.

Such transformed credits could be sold to specialized investors and provide the banks with liquidity. After obtaining it, they could grant new credits. Introduction of the new law would cast control over mortgage transfer certificates, as at the end of 2013 their value exceeded €96.164 million.

Also, mortgages granted for 80% of a property appraisal value, second mortgages, those granted for 30 years or even loans for more than 100% (granted during the real estate boom times) will be embraced by the regulation. (…) It will be applicable only to the property in Spain.

The notes can be issued to sell directly to qualified investors, (…) like private equity firms, other financial institutions or to small and medium-size companies.

Briefly speaking, the mortgage notes are mortgage bonds including poorer quality assets. Another type are mortgage bonds that give the utmost security (…) and could make up to 80% of an entity´s balance and they have no way out from there. (…).

The mortgages destined for sale must meet a set of requirements (…).



Original article: Cinco Días (P. M. Simón)

Translation: AURA REE