When we decide to embark on a mortgage loan we rarely consider that at some point we will face an adverse situation that forces us to stop paying the installments. However, this is a real possibility that thanks to the crisis experienced thousands and thousands of families in our country.
In the worst case, not paying the mortgages can lead us to suffer a foreclosure and lose the house, (although it does not have to reach that point) that is what is happening now. Besides that there is no forgiveness of the debt and what we have already paid for the house we lose completely. Let’s try to explain this more carefully.
The crisis has dramatically raised the levels of delinquency and despite the moratorium on the payment of mortgages approved by the Government at the time and other measures designed to extend the term of mortgages a significant percentage of the population has been seen in the situation of having to stop paying the mortgage.
Undoubtedly the tens of thousands of foreclosures have been one of the visible and hardest consequences of the economic crisis in our country. Although the figure of a foreclosure is well known for its consequences, we are not always clear about the process by which this situation is reached.
We must start from the basis of understanding that the mortgage is intended for one of the largest investments we will make in our lives within personal finances, the purchase of housing. A financial commitment is forged not only for the present, but also for the long term since we generally subscribe to mortgages with 2 or 3 decades of amortization period.
In this context, the mortgage is an agreement between the parties through which the bank, as a lender, offers to pay a percentage of the home through a loan. This loan must be returned plus the interest and expenses generated by your admission.
Now, what happens if I do not pay the mortgage?
If you are late in paying the installments of the cialis without mortgage loan, you will have to pay the credit institution the so-called default interest, whose rate is usually much higher than ordinary interest rates. The form of calculating default interest is contained in the loan deed. So, in addition to not being able to cope with monthly payments, will accumulate those of the interests that are increasing, because they are debt, which are increasing.
In addition, entities could charge a fee for claiming unpaid installments, the amount of which will be included in the contract.
Usually entities incorporate clauses in the contracts that allow them to give up the loan in advance if they stop paying one or several installments, and can then judicially or extrajudicially claim the borrower the amount of the loan’s non-amortized principal and the ordinary and late payment interest accrued until that date.
Normally the entities carry out the communication about the unpaid installments to the delinquency registers. Likewise, the entities must notify it, if applicable, to the Risk Information Center of the Bank of Spain.
You may exercise the rights of access, rectification, cancellation and opposition contemplated in the regulations (Organic Law 15/1999, of December 13, Protection of Personal Data).
In this article we reflect on whether it is better to amortize the mortgage or save
The process that leads to real estate foreclosure begins with the non-payment of the mortgage. It is not about the non-payment of a fee or the irregularity in the payments, but about the suspension of the attention to the installments of the mortgage. The bank will inform us of the refund situation and will ask us to remedy it. Whether we can not remedy the situation or not answer the bank will begin to take action.
It is very important to try to avoid this situation. If you can not pay the total fee but if you can pay a part you have to try to reach agreements (can not always be obtained) and find solutions together with the financial institution. In this sense there are entities more flexible than others. In any case from the beginning should be clear our intention to pay the debt but also our situation of economic difficulty to do so.
Although it is usual for mortgage proceedings to follow a judicial channel, it must be borne in mind that in some circumstances they may also follow an extrajudicial channel. An extrajudicial execution can put a mortgage property for sale simply by the notarial intervention without going to the judicial process.
However, the most common is the so-called foreclosure procedure in which it is contemplated that the mortgagee may collect the debt through the execution of the guarantee, in this case the mortgaged home if there are no others. This exceptional situation can occur when the debtor does not fulfill its obligation to pay the monthly installments.
It is also very important to be clear that our legislation, unlike others, continues to claim the debt to the debtor even if the debtor has already lost the home and it has not been enough to cover said debt. In this case, the debtor responds with his present assets but also with his future assets.
In case of non-payment, the lender can recover the amount pending collection through the sale of the mortgaged property, following the foreclosure procedure established in the Civil Procedure Act or, as the case may be, the extrajudicial executive procedure -with the intervention of a notary- provided in the Mortgage Law. I mean, they keep their house, they sell it, and you still pay the money you owe on the loan you asked for, without them returning anything that you had already paid and that you lost when your house was repossessed.
Obviously, it would be possible to rehabilitate the loan by satisfying the pending amounts and updating its payment.
Once the mortgage process has begun, the first phase will be the demand that the financial institution will bring before the judge. This demand usually ends in a car in which the debtor is ordered to pay, this requirement is made at the debtor’s home by document. The judge will request the registration of the property after the property registration before proceeding to the auction, after notifying the debtor.
In the event there are no bids, the financial entity may be awarded the property for 50% of its value.
However, when the property whose mortgage has not been paid is the debtor’s family home, the procedure is different. In the first place, in what is called enervation of the mortgage action, the possibility of rehabilitating the loan is offered as long as the debtor pays the exact amount of principal plus interest due on the date of the demand, that is, the fees plus the expenses. This can be done without the consent of the bank.
Therefore, until the day of the auction itself, it is possible to record what should be avoided if the home is the family’s home. If this is done the debtor may subsequently continue paying the mortgage as if nothing had happened. In any case, this is an option that can only be exercised once every five years at the most.
That means that until the appointed day for the auction you can record what is owed and avoid running the house, if it is the family’s home. And the debtor can continue paying the mortgage as if nothing had happened. This possibility that the law gives to give additional protection to the family home, can only be exercised once every five years.
Sometimes, the contracting of an insurance of amortization is demanded, by means of which the organization would charge of the insurer the amount of the pending debt if you could not pay because the circumstances included in his cover occurred, as they can be death, disability or long-term unemployment, etc.
The judicial execution implies that the entity, if there are certain circumstances included in the contract -normally the non-payment of the loan- may offer the mortgaged property for sale. Extrajudicial execution means that the entity, if such circumstances exist, may place the mortgaged property for sale with the intervention of a notary, but outside of a judicial proceeding.
Discover in this post all the documentation you need to apply for a loan
How to avoid the launch
To try to suspend the launch there are several issues that can help the debtor in this regard:
That those affected are part of vulnerable groups, that they are in a situation of special economic circumstances, that affects the habitual residence, that there is judicial or extrajudicial process of foreclosure.
Within the above, the groups that can be included as special circumstances would be the following:
- Large families
- Single-parent families with two dependent children
- Families with children under three years of age
- Families with responsibility for people with disabilities greater than 33% or in a situation of dependency (including disabling diseases for work development)
- Unemployment situation and exhaustion of benefits by the debtor
- Families in which there is a victim of gender violence, when the house in the process of being launched is their habitual residence
We must also bear in mind that this group of special collectives can be accommodated by those families in which persons who accredit a disability, dependence or serious illness live and who maintain a relationship of consanguinity with the debtor up to the third degree.
The special economic circumstances is a subject a little more complex to define. In the first place, it must be fulfilled not to have among all the members of the family unit income that exceeds the limit of three times the IPREM. The scale is five times the aforementioned indicator if there are holders with recognized intellectual disabilities, cerebral palsy or mental illness. This also includes people with physical or sensory disabilities with degrees of disability equal to or greater than 65% and serious illnesses that enable the people who suffer or the caregiver to maintain professional stability.
It can also be used as a special economic circumstance to suffer an alteration in the income of the four years prior to the foreclosure process. Here, it must be considered that the effort of the mortgage burden in relation to the family income must have multiplied by at least 1.5. It also serves the justification of a mortgage payment that exceeds 50% of the net income received by members of the family unit, adding that the mortgage is the only dwelling of the debtor and that the loan has been granted exclusively for the acquisition of housing.
In any case, not even these circumstances necessarily guarantee the long-term stoppage of the process.