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Steve
10-22-2008, 01:05 PM
I purchased a Property on the very exclusive El-Valle complex of the Polaris World layouts a few years ago, as an investment, and due to increasing fianancial difficulties I am now in danger of falling into arrears on the mortgage repayments. The property was bought at 210,000 Euros and similar acquistions are on the market for 275,000 Euros. I have seen my circumstances deteriorating for about a year now and have not missed a payment, however, things are becoming serious for me financially and it is looking increasingly likely that I will not be able to keep this property. My problem is that I have not had any rentals to help fund the mortgage of 170,000 as was initially promised, and I don't have any equity in my own home in the UK. I am trying to sell the property for 200,000 Euros in an attempt to offload the drain on my monthly income, but it is not proving successful.

Can you help me with my case in any way and at least let me know what my options are right now.

aflores
10-22-2008, 02:09 PM
It is indeed a difficult situation for many.

I can propose that you do one or several of the following:


Be frank to bank and tell them about your problems. Bank will either try to a) make you feel guilty about the situation and say that the ball is in your court and that they cannot help you further or b) scare you out of proportion to make you think that you will be chased around the world for this debt, which is not true.
Propose them an interest only payment for say 2 years. This will see your repayment greatly reduced.
Combine the above with a rental, even if it is below the market, as you should at least be able to get 3% of 200k, around 500 Euros per month.
If the bank is not willing to help them then be cold and ask them when is it a good time to come to see them as you want to hand them over the keys to the property, the deeds and the utility bills. Of course this will not discharge you from the obligation of paying the debt but you will see a change of attitude in them immediately.

ifv
11-09-2008, 05:21 PM
More on http://www.marbella-lawyers.com/blog-by-antonio-flores/cannot-keep-up-repayments-on-your-spanish-mortgage-not-all-is-lost/

Lawbird Lawyer
12-01-2008, 04:08 PM
Dear Sir,

I’m not sure if you are aware the Euribor, to which all Spanish mortgages are referred to, has fallen dramatically (http://www.marbella-lawyers.com/wordpress/steep-drop-in-euribor-translates-into-cheaper-mortgages/)over the last weeks and will continue to do so as the ECB will be lowering the interest rate which translates into cheaper mortgages.

In any case the European Central Bank has lowered the interest rates significantly over the last months this ought to help drive down the Euribor rate. Banks will revise the Euribor rate and lower your monthly mortgage repayments.



Please read the following on Bank Repossessions in Spain:


1.- My article on:

Bank Repossessions in Spain (http://www.marbella-lawyers.com/articles/showArticle/home-repossessions-in-spain-defaulting-on-mortgage)

2.- Other related queries on this topic:


• Sterling Plunge: Not All Doom and Gloom (http://belegal.com/blog-by-antonio-flores/sterling-plunge-not-all-doom-and-gloom/)

• Steep Drop in Euribor Translates into Cheaper Mortgages (http://belegal.com/wordpress/steep-drop-in-euribor-translates-into-cheaper-mortgages/)

• What are my options if I have fallen in arrears on my Spanish mortgage? (http://www.marbella-lawyers.com/questions/showQuestion/193-What-are-my-options-if-I-have-fallen-in-arrears-on-my-Spanish-mortgage)

• We are in 3 months of mortgage arrears with a Spanish bank for two properties the developer have not completed properly. What options do we have? (http://www.marbella-lawyers.com/questions/showQuestion/190-We-are-in-3-months-of-mortgage-arrears-with-a-Spanish-bank-for-two-properties-the-developer-have-not-completed-properly--What-are-our-options)

• What to do if I cannot meet the mortgage repayments? (http://www.marbella-lawyers.com/forums/showthread.php?t=49)

• Unable to keep up repayments (http://www.marbella-lawyers.com/forums/showthread.php?t=65)

• Spanish Mortgages: No Tax on Term Extension or Swapping to Interest only - June-26, 2009 (http://belegal.com/wordpress/spanish-mortgages-no-tax-on-term-extension-or-swapping-to-interest-only/)

• The Dación en Pago Explained (http://www.marbella-lawyers.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank) (handing over the keys to the lender without repossession)

• Cannot Keep Up Repayments on your Spanish Mortgage? Not All is Lost. (http://belegal.com/blog-by-antonio-flores/cannot-keep-up-repayments-on-your-spanish-mortgage-not-all-is-lost/)

• 10 Common Abusive Clauses in Spanish Mortgage Loans (http://www.marbella-lawyers.com/articles/showArticle/10-common-abusive-clauses-in-spanish-mortgage-loans) – 4th of June 2009



The property still belongs to you, not to the bank. The debt goes personally against you. Which means that if the property is in negative equity (i.e. if house prices should fall) then the outstanding balance is owed by you. Spanish banks can and are already chasing up the debts in the UK. They may outsource it and hire local UK law firms or else debt collection companies or sell on the non-performing mortgage to specialised companies for a fraction of the nominal value. The latter will chase you. It's true that this is often an expensive process for Spanish banks so they will always be reluctant on doing it. It will of course depend on the amounts owed. Bear in mind the default interest rate is a normally between 24-27% compound interest p.a. (not simple interest!). So the debt will mount indeed very quickly over time.

Spanish banks are very surprised at this phenomenon and have been caught off-guard because they are used to dealing with Spanish customers who no matter what service their mortgage in time even if the afore means having to feed on bread & butter. Whereas many foreigners are just walking away as if this was the US thinking no further consequences will arise from this.

The ability of a solicitor to act on your behalf is honestly very limited due to the ongoing credit crunch as banks themselves are finding increasingly hard to secure finance lines. A number of solutions would be:

1. Negotiating interest only whilst the property is put up for sale or just to weather off the storm meanwhile. This option is now not feasible as Spanish banks seldom grant interest only and if they do it's really just as a teaser really for one year. Now with this credit crunch they are reluctant to even grant that one year.

2. You may extend the mortgage repayments (http://www.marbella-lawyers.com/forums/showthread.php?t=49) to an additional number of years. The drawback is that on doing so the amount of interests you pay on the long run is increased dramatically. So it's only an option for those who are left with no other really. The Government is now allowing this change free of charge to the struggling mortgage borrowers providing they are residents and it’s their permanent dwelling. So you will not pay for Notary or Land Registry fees on doing it.

3. Dación en pago. (http://www.marbella-lawyers.com/articles/showArticle/spanish-mortgage-dacion-en-pago-handing-keys-bank) This is basically handing over the keys to the lender (http://www.marbella-lawyers.com/forums/showthread.php?t=218) and signing a deed at the Notary by which the bank commits itself not to chase you for the debt and consider it discharged for good. The catch is that the property must not be in negative equity (http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/4840800/Nearly-4-million-home-owners-are-already-in-negative-equity-researchers-say.html) nor the repossession procedure started against you. This is more difficult than people think because due to the easy credit of the last years the Loan To Value of properties was really high, too high in fact, hence all the bank related problems we are reading with massive down writings. People borrowed far too much and now their properties may have fallen below their loan. If this happens the Lender will be very reluctant to agree to this "dación en pago" (hand back the keys to the Lender) because the collateral has no or few equity left.

4. If you already have run through the numbers and you are convinced that you will no longer be able to service your mortgage, rather than defaulting and being repossessed, you should very seriously consider selling the property as a distressed asset (many websites offer this service). The catch again is that the property should not be in negative equity. The more it is the least likelihood there will be anyone interested in it as they in turn are regarding the purchase as an investment and the numbers need to stack up to make it worthwhile for them.

I hope the above helps you, good luck.

Yours faithfully,
Raymundo Larraín Nesbitt

debragander
12-16-2008, 06:10 PM
Hi Steve,

My name is Debbie from the UK, I am in the same situation as you, Ive got 2 properties on La torre and am unable to keep up the repayments, I'm frightened of losing my property over here if they persue the debt so I'll be interested to know what you have found out.