In what are difficult times for a great many beleaguered homeowners, news that the government has initiated a series of rulings that step up protection of mortgage holders will be eagerly received. Since they affect so many people, Spanish nationals, foreign residents and second homeowners alike, it is important to keep up to date with changes in the laws, and how they affect us.

On Friday July 1^st Deputy Prime Minister, Alfredo Pérez Rubalcaba approved several measures aimed at improving the financial situation of mortgage holders. Under the new regulations, the personal income allowable to those involved in embargoes due to foreclosure proceedings increases from 700€ per month to 961€, plus an additional 192€ for each additional member of the household without income, thus creating a small but much-needed extra safety cushion. Meanwhile, the minimum value that can be ascribed to repossessed homes now rises from 50 per cent to 60 per cent, an increase that should considerably ease the financial burden on the homeowner, who will be left with a smaller debt to repay.

These new initiatives had already received almost unanimous support when they were first mooted as non-binding resolutions, following a lively State of the Nation debate. However, notable by its absence was a measure to abolish the unpopular minimum-interest clause (Clausula Suelo), which allows banks to charge variable-rate mortgage holders a set minimum amount, no matter to what level the base rate drops. Pressure groups have been pressing for action on this for many months, since thousands of mortgage holders have been unable to take advantage of the recently favourable Euribor rate.

Another measure that was considered a step too far was the resolution that called for the government to institute a system by which the repossession of a home would automatically clear the householder’s debt to the bank. Spanish law still dictates that negative equity is the financial burden of the mortgagee.

Information courtesy of the team at Perez Legal Group.