The Law regulating real estate credit contracts (LCCI) has complied two years, Y Jose Angel Martinez Sanchiz, president of the General Council of Notaries, has indicated that, with this, “they have increased the transparency and legal security of mortgage loans “, in a meeting attended by ‘Information’. The regulations were created to guarantee the free choice of a notary by citizens and to curb the obligation to purchase services linked to these tools, such as insurance, imposed by banks.
The entity’s spokesperson, Teresa Barea, has indicated that the law in question eliminates this imposition by financial companies and encourages the free decision of the contracting parties. Anyone can purchase products related to these contracts from the same bank with which they are signed or opt for another provider. The spokesperson celebrated that future borrowers have more and more information And they are aware of their possibilities around these loans.
This law also ‘touches’ the advanced expiration date of contracts for non-payment since it grants a 12 month margin -in the first half of the loan- when there is a delay in payment of an amount equivalent to 3% of the capital granted. As for the second half of the loan, the early maturity will proceed after a default that represents 7% of the credit in a period of 15 months.
The leaders of the entity also highlighted that the regulations limits the fees banks can charge customers for the early repayment of a fixed rate mortgage, which can be a maximum of 2% for the first ten years of the life of the loan and 1.5% for the rest of the term. Regarding the variable rate mortgages, the legal limit is 0.25% for the first three years or 0.15% for the first five.
Another highlight of the event was that the new regulations have facilitated the choice of notary by clients of financial institutions; a right that corresponds to the borrower and that is inalienable. This law “guarantees the consumer’s right to choose the notary of his choice and meet him alone to be able to consult your doubts, without any cost associated with it. Experience shows that these encounters alone take place, on average, between seven and three days before the authorization and signing of the loan “, according to Teresa Barea
In these two years, notaries have authorized 677,596 transparency acts, compared to 606,498 mortgage loans signed including novations and subrogations, a figure lower than that registered before the entry into force of this law because there are operations that require more than one act, cases in which one of the two parties changes its mind and the expiration of the terms to complete the procedures. In these minutes, which are free, the Notaries verify that the financial institution has delivered all the documentation to the consumer of the loan with sufficient time and that the information provided is what should be based on the type of loan agreed by the parties.
Even so, everything can change because the period analyzed in this report has been characterized by great volatility in the mortgage market due to the crisis that unleashed the coronavirus pandemic. In fact, the market marked minimums in the signing of the minutes during the month of March (25,354), which worsened in April (16,563).