The Mortgage Association proposes a law of family insolvency as an alternative to the assignment in payment.

The Spanish Mortgage Association (SMA) is totally against the retroactive assignment in payment proposed in the Popular Legislative Initiative (PHI) admitted in Parliament, declaring it would have negative effects on the population, such as the increase in the price of credits. Instead, the organization, made up of banks, savings banks and credit unions, proposes an insolvency law or a second opportunity law for families and individuals, similar to the corporate one.

“It is a deficiency of our legal system and it needs to be addressed in the short term”, Santos Gonzalez, president of the Association, declared on Monday, who has also reminded that this legislation already exists in other European countries, such as France.

A norm like this would allow a family which cannot meet the payment of their mortgage to have recourse to a payment plan to reduce their over-indebtness, or a renegotiation of the debt or even the forgiveness of the debt. Should all this fail, the individual would face a liquidation process, similar to the one already existing in companies, being held responsible for those debts only with his existing patrimony.

In any case, Gonzalez points out that in a situation like this the mediator would take over the family´s economy and resources, establishing priorities for expenditure.

The Association also thinks it is time to develop a housing and land plan which can promote rentals. “Spaniards do not prefer to buy properties, but they have no other alternative”, Santos declared (…). “Spain has no social housing policy”, he has denounced.

The SMA also believes it is possible to include clauses in the mortgage agreements to make default interest rates more variable. Gonzalez is against their elimination justifying their existence for economic and financial reasons. “If they exist, it is because the default credits consume more resources, provisions and capital, according to the regulations of the Bank of Spain, and therefore originate financial expenses which can affect the solvency of institutions”, he has explained.

(…) The Association is totally against the assignment in payment with retroactive effects. “It can be disastrous because it would only benefit a few but would damage a majority”, Santos has said, who has explained that the assignment in payment would increase the prices of credits for the rest of citizens, as well as for those who are paying their mortgages. “It would be a collective damage”, he has said, while criticizing that those who defend the assignment in payment do not explain that the money lent to families in an eviction process belongs to the rest of citizens. (…)

Source: ABC

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