If until recently the concept of giving in payment of the loans with mortgage guarantee (the extinction of the debt before the delivery of the property) was used almost exclusively in the legal field, today-fortunately-has been extended and is used for the majority of society. Such has been its scope, that in recent elections, has even been included in some of the electoral programs as a promise to the consequences that is generating the current economic-financial crisis.
My intention is to observe the dation in payment from another perspective, taking into account a type of borrower that nobody has mentioned and who can bring all the light to this debate, because it is a great majority, about its adequacy or not.
In relation to the mortgages granted, and as such affected before the possibility of making the dation in payment, let’s review some figures, at least illustrative. According to the latest published data, the banking default stands at 6% (we could say that out of every 100 mortgages in 6 the payment is not being paid). We add that there is another 4% (an amount close to the current default, one of the highest in recent years) that has difficulty paying the mortgage, but still is facing monthly installments.
That is, this 10% of the mortgages granted, more specifically their borrowers, would be the great beneficiaries if there was the possibility of making the dation in payment, some to settle their debts and others to alleviate their domestic economy. And it is at this point where the silent majority appears, and very important to see the global nature of the consequences: What do we do with the remaining 90%?
Even if the question seems rhetorical, it is not and you need an answer. This group of people, who represent the vast majority, is up to date with the payment of their mortgages and has no difficulty in their payment, therefore, it does not seem to be the group to whom the payment is directed. However, if there is the possibility of paying off the debt by returning the property to the lender, do you think they would continue to pay for a property that they are fully aware of, regarding their purchase value (or the amount of the mortgage loan), today? could they recover by selling, with luck, only 70%, and still have to pay the remaining 30%? Or, in the face of selling difficulties or simply living in it, do you think they would continue to religiously pay dues for decades for a loan on an asset that is overvalued? I believe that many of them, at least, would consider what to do.
This is where the problem lies in raising the possibility of giving in payment
with retroactive effects, that is, effectively on the mortgages previously constituted by the entry into force of the law. It would suppose that this 90% in its great majority would present/display in its banking organization with the keys in the hand and the following day it would return to enter to constitute a mortgage on the wide catalog of floors in wallet to prices of current market; or propose a revision of your mortgage consisting of reducing the loan amount to be returned to the lender, under “the threat” of returning the asset and paying off the debt.
It is true that the possibility of giving in payment is being considered in cases in which people have difficulties to comply with their obligations and are, in some cases, immersed in a judicial process. But it is no less true that any person is free to not fulfill their obligations accepting the consequences of their decision. Always speaking hypothetically, it could be the case in which a person voluntarily quit paying their fees and the lender will initiate a foreclosure proceeding, and just before the conclusion of the public auction will deliver the good to pay off their debt. Said person would have “saved” the amount of about 6 or 8 mortgage payments (plus the termination of their mortgage loan), and the bank would have assumed legal costs to obtain a result that could have been obtained through extrajudicial means.
For all these reasons, I believe that this proposal to modify the Mortgage Law that is being cooked must be studied very calmly by all, as well as all the parties involved, understand its consequences and why the positions of both. And it is that the hypothetical possibility of the dation in payment can be for some a life preserver, for others an opportunity, and for others even a ruin. Everything depends on which side and in what position you are located.