- Minister Luis de Guindos advances regulatory changes and promotes a Code of Good Practice for financial institutions.
The Minister of Economy and Competitiveness, Luis de Guindos, today announced in the Congress of Deputies a set of regulatory measures to reduce the impact of evictions on groups at risk of social exclusion, which would be completed with a Code of Good Practice voluntary to be adopted by the financial sector. The measures are part of the Government's economic policy, which has as one of its priorities the search for social equity.
The normative measures will begin with the definition of the group included in the threshold of social exclusion. In this situation the family units with all their members will be unemployed and whose dwelling is the first and only residence. In any case, the necessary precautions will be established to avoid situations of abuse or fraud.
The improvement of the procedures for the execution of mortgage guarantees will also be promoted, so that, if this point is reached, the price of the home is as high as possible. The minister said that an agile and transparent national foreclosure market will be promoted through the promotion of extrajudicial foreclosures, the creation of a computerized database of national foreclosures and the possibility of auctions being carried out online. These measures will be developed in collaboration with the Ministry of Justice.
The legal reforms also incorporate the mitigation of default interests, where there is a clear margin for restraint, a measure also aimed at people below the exclusion threshold.
Luis de Guindos also explained the drive for a Code of Good Practice that works with financial institutions. This Code will be of voluntary adoption by the financial entities, whose adhesion will be made public. It will also be used for people at risk of social exclusion.
The Code will contain recommendations such as the possibility that, in the event of foreclosure, the payment of the principal of the mortgage is proportional to the number of installments paid or, alternatively, the outstanding principal is reduced in the same proportion. This is intended to correct the current situation in which, at the beginning of the life of the mortgage, more interest is paid than principal. Expenses and costs, sometimes very high, should also be moderated.
The second measure must contemplate the assumption by the credit institution of part of the risk in the event of insufficient guarantees. It is about establishing a co-participation mechanism that covers a certain percentage by the financial institution, due to the deficiency of the appraisal or the devaluation that the property has suffered.
It also includes the possibility of allowing the payment in payment as a means of releasing the debt for the same cases of social exclusion. There will be a grace period for the eviction of the house that could be in two years, extendable in certain circumstances, in which the debtor would pay an income to the entity.
The incentive for the adoption of the Code of Good Practices by financial institutions would be the possibility of including as a tax deductible expense the losses that they had incurred.
In short, it is a set of measures, the objective of which is to truly alleviate the situation experienced by so many Spanish families at risk of eviction, which is another example of the sensitivity of this Government to the most disadvantaged, and to demand a commitment to solidarity to those who have the most.