Voluntary Adherence to the Code of Good Banking Practices: Protecting Mortgage Debtors

Last March, the coalition government approved by royal decree-law a package of urgent measures to protect the mortgage debtors with fewer resources. This document, which is called the Code of Good Practices, contemplates a series of proposals for those people who, despite having pending mortgage payment, are within the threshold of social exclusion or in a situation of vulnerability. The Bank entities and all those companies that, in a professional way, are dedicated to the granting of loans can voluntarily adhere to this kind of ethical code.

The measures contained in this document promote the involvement of the financial sector Spanish in the effort required to alleviate the difficult economic and social situation of families that meet the established requirements. The goal of Code of Good Practices It is none other than restructuring the mortgage debt or the deficit corresponding to the rent in the event of foreclosure of the habitual residence.

He Code of Good Practices It contemplates three phases of action. The first, aimed at procuring the viable restructuring of the mortgage debt through the application of a grace period in the amortization of capital and with the lower interest rates, which will last for five years. In the same way, the repayment term of the loan will be extended. The beneficiaries of these aids have to demonstrate that they are in situation of social vulnerability, that the value of the acquisition does not exceed 300,000 euros and that it is a habitual residence.

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If the previous restructuring is not sufficient, the entities may, optionally, offer debtors a discount on the entire debt. Finally, if neither of the two solutions succeeds in reducing the mortgage effort of families, the beneficiaries will be able to continue in the dwelling with a rental right. In these cases, families may remain at home for a period of two years as long as they pay a assumable income for your financial viabilitywhich will be previously agreed.

The protection granted by this scheme to debtors with economic difficulties is conceived as a set of measures that aim to ease the mortgage burden of those families that, having a limited volume of income, can find themselves with problems when it comes to supporting said burden. In this way, the lower the income, the person requesting the application of these relief measures may opt for lower fees, lower rates y longer terms. In Spain, a total of 54 financial entities have adhered to the Code of Good Practices, including BBVA, Banco Sabadell, Banco Santander, CaixaBank, Abanca, Bankinter and multiple rural banks.

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