Ángel Mas, presidente de Genworth Financial writes today in Orbyt Expansion that the negative equity of many property owners in Spain is due to bad practices of financial entities which granted mortgages under imprudent risk criteria, combined with a very high property financiation based in a very aggressive property valuation with the assumption of unsustainable growth. All the above, also, with an incomplete information to the consumer.
He is proposing several principles:
1. - To avoid honest and reasonable debtors under temporal and unforeseen circumstances’ to lose their houses.
2. - To control the incentives of mortgages to consumers in order to stop speculation
3.-To stop immoderate property valuations
....and concrete proposals:
- Mortgages no higher that 70% of the property value
- Limit can be exceeded if combined with an Insurance of payment protection in mortgage loans
This insurance has several benefits:
- Insurance companies revise the profile of the debtor, avoiding over crediting and facilitating access to credit
- Insurance companies will be paying mortgages quotas during unemployment so the debtor will not lose his home
- Insurance and Banks will establish clear and transparent refinancing procedures with access to debtors under difficulties
- If there is finally a repossession, the risk is transferred from Bank to Insurance Company avoiding this way a restriction of financiation for the buying of houses.
Clever... isn´t it?
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Horce races in Sanlúcar beach, Costa de la Luz by Fotografia S. Bautista at Flickr.com