Bank repossession offer in mainland Spain

[golf birdie]

A friend of mine on the mainland has fallen behind with their repayments and has told the bank they cannot pay any further payments due to being unemployed. The bank has asked for power of attorney to sell the apartment.

I told him to write the following to the bank:

Please can you answer the questions below to clarify what you are offering.

What price would expect this apartment to raise on the open market?

If it is sold for less than the debt would I still responsible for the outstanding debt?

As stated in a previous email I am unemployed and do not have any income or means of paying the mortgage on this property and would like to find a way of bringing this matter to an end.

This was their reply

Our intention is to value the apartment and then determinate a minimum value. We know it will be less than the outstanding debt. You would be released of all liability with (banks name) once it is sold. The outstanding Local tax (IBI) and Community (Comunidad de propietarios) would be on you.

I have told him to speak to a lawyer but he is very short of money. Does this seems like a very good offer to you or is it possible the bank could still hold him to the debt? Seems like a get out of jail card to me.

[bulldog]

A friend of mine on the mainland has fallen behind with their repayments and has told the bank they cannot pay any further payments due to being unemployed. The bank has asked for power of attorney to sell the apartment.

I told him to write the following to the bank:

Please can you answer the questions below to clarify what you are offering.

What price would expect this apartment to raise on the open market?

If it is sold for less than the debt would I still responsible for the outstanding debt?

As stated in a previous email I am unemployed and do not have any income or means of paying the mortgage on this property and would like to find a way of bringing this matter to an end.

This was their reply

Our intention is to value the apartment and then determinate a minimum value. We know it will be less than the outstanding debt. You would be released of all liability with (banks name) once it is sold. The outstanding Local tax (IBI) and Community (Comunidad de propietarios) would be on you.

I have told him to speak to a lawyer but he is very short of money. Does this seems like a very good offer to you or is it possible the bank could still hold him to the debt? Seems like a get out of jail card to me.

I know someone here in Tenerife who,s house was sold recently by the bank and they wrote
off nearly 100k.they are now debt free I asked my bank manager how could that be he said
banks want to free themselves of toxic debt and it will be correct.who,d of believed it!!

[bonitatime]

There seems recently to be The concept that if The bank repossess they have to take responsibility for the whole outstanding debt

[golf birdie]

There seems recently to be The concept that if The bank repossess they have to take responsibility for the whole outstanding debt


I do not think this would be classed as a repro as they are asking him to give them power of attorney to sell it. It just seems like a very good deal to me but can there be a catch?

[kez1000]

Think the banks look at each case on merit. Fact are your friend says they have no income to pay and wants to bring it to an end. If the bank leaves it, like your friend, it will only cost them more money too, so there comes a tipping point which (as stated above), the debt becomes quite toxic in the sense that the banks chance of collecting the monies owed and future potential of collecting monies are restricted, perhaps even zero, so they cut their losses (make no mistake, these are real losses for the bank) and make an offer to end it.

This is the main driving force in what interest rate you can achieve in a mortgage now, if you have a high equity to loan ration e.g. above 30% equity, you can normally get what I would refer to as a gravy train rate of 3% or less (UK reference). With less equity than 30% it progressively generally gets worse, provided there are no other securities. So a 10% deposit mortgage may cost you 5.5%, double in interest which means the capital you owe on your house from each payment made is less. Problem is, many peeps don't have the choice or large deposit funds and so they get into this terrible spiral of persistently low equity value in their house.

After the banking crisis, confidence has been lost as so many peeps have lost their houses and the banks are all baddies, according to us, the government, the regulatory authorities etc etc. So now, the real problem is lack of traction in lending, the bankers are like naught school kids, they have been told off so much that unless they have good deposits (equity) or securities, they don't want to lend and it's the government saying be more responsible you bad banks. Fact is, bank rates on mortgages are generally a pretty cheap form of finance when you compare with the loan companies. I say be careful what we wish for and help those who want to own their own home with affordable finance and a mechanism for dealing with the bad or unexpected times that gives them chance to get back in order.