• The data of the Control Commission refers only to the first quarter of validity
  • The debt of the requested operations amounts to 69.5 million euros for 28 financial entities
  • Andalusia, the Valencian Community, Catalonia and Madrid concentrate 73% of requests

Financial institutions that have adhered to the Code of Good Practice (CBP) for the protection of mortgage debtors at risk of social exclusion have received 568 requests during the first quarter of application of the measure. Of the 100 entities that signed the CBP, only 28 declared having received requests. 73% of requests are concentrated in Andalusia, the Valencian Community, Catalonia and Madrid. The total outstanding debt reached 69.5 million euros in that period.

These data are collected in the first evaluation report prepared by the Control Commission that is made public today. The Ministry of Economy and Competitiveness, the Bank of Spain, the National Commission of the Stock Market and the Spanish Mortgage Association are represented in this Commission. The data refers to the period that runs from March 11 to June 30 of this year.

Of the 568 requests received during that period, 283 were pending resolution at the end of the quarter, that is, 49.8% of the total. Of the 285 applications whose processing was completed, the entities resolved 278 that corresponded to loans and credits with an outstanding debt of 36.5 million euros. In the remaining seven cases, the applicant gave up.

Of the 278 requests resolved, in eight cases the payment has been made and the debt has been extinguished. In 44 cases, a restructuring of the outstanding debt has been carried out. The rest of the requests (226) have been rejected by the entity because the debtor did not meet the required conditions.

It should be borne in mind that these data correspond to just one quarter of CBP application, a measure that until now had never been implemented in Spain. In addition, the vast majority of accessions of financial institutions to CBP did not end until mid-April and the Control Commission had to do some prior work, such as its constitution, the approval of the statements of responsibility or the accuracy of the information to be requested from the entities, which have had to submit the data in a short period of time.

These factors explain that, in practice, the validity of the CBP has been less than the three months analyzed. This is a first attempt to solve the problem of evictions for cases of first home and risk of social exclusion and, as such, it should be given more time to demonstrate its effectiveness. In fact, in the second quarter of validity of the CBP, between the months of July to September, around 700 other applications have already been submitted.

It is early, therefore, to draw conclusions in this regard, but the Government has already indicated its intention to expand the assumptions of application of the CBP in the event that the current ones are. In addition, the Council of Ministers of November 15 decreed a moratorium for two years of evictions for groups below a certain threshold of income (19,170.4 euros per year, on the average salary remuneration in Spain) whose mortgage suppose more than 50% of the income and that they are also especially vulnerable people due to their family circumstances. All this always referred to the habitual residence.

In order to contextualize the report, the Control Commission highlights the low data on mortgage delinquency in Spain. According to the Bank of Spain, in the second quarter of this year, the delinquency rate reached 3.38% when the mortgage business represents 40% of the total balance of the financial sector in Spain. In other words, the payment of the mortgage is an obligation that is fulfilled in a general way in Spain and what it is about is to respond to the problems of the groups most affected by the crisis.

In its conclusions, the Control Commission highlights that a quarter is too little time to evaluate the functioning of CBP. Understand that, once the results of the second quarter are known, a more accurate assessment of your application may be made. At that time, he adds, the causes that could affect both the number of applications submitted and the high number of operations denied must be assessed.

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