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Congress Agrees that the Banks will Pay All Mortgage Costs, Except the Appraisal

13 November 2018 – Expansión

The political parties today agreed by majority that the new Mortgage Law will establish that notary expenses linked to the signing of mortgages will be paid by the banks and that the appraisal costs will be paid by customers.

Moreover, the notaries will carry out a questionnaire with each borrower to ensure that he/she understands all of the clauses in the mortgage contract, at no additional cost.

The Mortgage Law was presented again today at the Congress’s Economy Committee after the Government approved a royal decree law which stipulates that the Documentation Registration Tax (AJD) will be paid by the banks and not by customers.

The new Mortgage Law reflects that decision and makes it clear that the financial institution will pay for the first copy of the notary deeds; the customer will cover the cost of any copies he/she requests. Meanwhile, the registry costs will also be paid for by the bank; and the borrower will pay the appraisal expenses since he/she will be able to choose the appraisal company freely.

Nevertheless, several other important issues still need to be agreed, such as those relating to early repayment fees, late payment interest and the early termination clause of mortgages and which allows the foreclosure of homes depending on the debt that has been acquired by the borrowers (…).

On the other hand, the political parties will also have to decide about the entry into force of the new standards, given that the financial sector is asking for a margin of 6 months versus the 15 days that the draft bill is proposing.

The Mortgage Law, which is a transposition of a European directive, seeks to provide greater protection for consumers and promote transparency in the granting of mortgages, which is why the political parties have agreed that appraisal companies can be independent physical persons or legal entities (…).

Original story: Expansión

Translation: Carmel Drake