Both banks and ‘strategic bad payers’ face new rules for debt management after the new laws voted by the parliament. There are ten main developments set to make foreclosure processes faster.
1. Delivery of auction notice: in many cases in the past, banks have been unable to find their clients, resulting in delays in the foreclosure process. New legislation even allows for posting notifications on house entrances.
2. Inclusion of old court decisions in the process.
3. Mortgages are broken up to secure all of the borrower’s loans.
4. The sale process for mortgaged real estate changes with the introduction of clearer periods in which the reserve price is applicable. The reserve price will be determined for a period of three months after the completion of the first auction and will be no less than 80% of the market value of the mortgage, regardless of the method of sale. Over the following three-month period, a reserve of no less than 50% can be applied.
5. The cases in which the borrower can appeal to justice are limited.
6. Old court decisions, debts from court rulings or arbitrations will be covered by the new procedures.
7. The mortgagor has to allow the mortgagee to enter the property for purposes of calculating its market value.
8. The mortgagee’s privileged status will stop when s/he receives a state subsidy as a contribution to cover part of the debts and when the value of the primary residence exceeds € 350.000.
9. The foreclosure procedure can be stopped only after the issue of a court order.
10. Online real estate auctions will be made possible.
The changes in loan sales include the following:
– All collateral is transferred to the buyer without the payment of fees.
– The transfer of borrowers’ benefits, as well as their obligations, is ensured.
– The borrower acquires access to all documents related to the loan agreement.
– The loan seller (bank) acquires the right to offset the borrower’s deposits and debts.
In regard to the insolvency framework the following changes are noted:
– The market value of the beneficiaries’ principal residence rises from €300,000 to €350,000 and the total value of the rest of the property rises from €250,000 to €500,000.
– Borrower protection is terminated if they fail to meet their obligations after a period of three months. In addition, guarantor protection is extended.
-In the case of a redemption plan, the specified percentage of the insolvency practitioner’s fee is increased from 20% to 30%. The proposed rate increase strengthens the incentive for reaching an agreement.