Handing back the keys to the bank

Hi.

I posted on the Spanish Mortgage Forum on 14/2/10 asking about handing the keys back to the bank as we can no longer afford the mortgage (although have not defaulted on our payments ).

Maria kindley answered and said this is a possibility

We have been in touch with the bank to explain our situation and filled in a form they sent and faxed back them.

They did offer a small reduction in our interest rates for 6 months but this will leave us in the same situation in 6 months time.

They also said we should try to sell the property or rent it out, both of which we have explored but this is going to be to difficult to do.

The bank have told us that handing back the keys is not an option they would accept.

We have tried to do this ourselves because of the costs involved but do not know what to do next.

Could you tell us if the bank has a right to refuse us handing back the keys, if you think we need to ask a lawyer to negociate for us and how much the cost and how long it normally takes if we were to do this.

The house is in Manilva and our bank is in Fungirola.

Many thanks for any information/advice you can give.

You have a right to give your property back to the Bank. It is necessary to use a financial valuation of the house to demostrate the bank you are paying all the debt out with the handing of the property.

Best regards,

Maria

 only if there is enough equity within the property will the back accept the keys back.

They will not take it back if there is a negative equity showing.

Regards

Georgia

You should obtain a valuation (tasacion).

Ask your bank to instruct a valuer and if they do not then engage one yourself such as Alia Tasacion. Either way you will have to pay for it but at least then you will know where you stand as regards equity in the property.

http://www.aliatasaciones.com/index_eng.html

I know someone last year who sold a property for less than the outstanding mortgage and converted the balance into a personal loan - of course this deal needed the consent of the bank!

The problem you will face is the banks are not in the least bit commercial and you will need to bring all the ideas to the table and argue what you are proposing is the best deal for you and them.

Also problem these days is the Manager has no authority and Head Office can't make a decision!!!

I would not advise throwing the keys and running becuase we don't know if banks will chase people overseas etc unless of course your situation overseas is equally as bad etc.

But if this property is dragging you down then you've got to do what needs to be done.

Best of luck

We are still trying to hand the keys back to the bank and even though we have asked a lawyer to liase with the bank after we tried ourselves, still have not got very far.

The laywer had the same reply as ourselves saying they would not accept the handing back of the keys, but was told we should try to sell the property. 

Can someone please tell us what our legal rights are using the Dracion en pago procedure, can the bank refuse to accept the keys back?

If not, how can we get them to agree to this.  We continue to pay the mortgage and all the associated bills/community charges despite finding this difficult financially.

I am sorry to keep asking the same question on this thread but nothing we are doing is resolving this situation we find ourselves in.

Many thanks for your reply.