There are many personal situations that can lead an owner to not have the ability to continue paying his mortgage payments, or even those of an inherited home already in debt, but all of them lead to the same end: seizure of the home and eviction.
It is a scary situation, but you can cling to a last alternative by selling the repossessed home to pay off the debt and not be registered in defaulter files.
From the moment the mortgage stops being paid, until the seizure and subsequent eviction, there are a series of phases that can last up to two years.
Firstly, the bank sends two warning communications, the first after 15 days of the first non-payment, and the second after 12 accumulated non-payments in the first half of the term or 15 in the second half.
The second step is a lawsuit, where the entity requests the seizure of the home and its subsequent auction. Until this moment, the owner can take advantage of the time that the process continues, which can take months, to try to find a more favorable solution.
Otherwise, if the owner does not settle the debt or make the appropriate allegations within the time period granted by the judge, the judicial auction is held, where the starting price is usually 70% of the appraisal value. Once the home is acquired by a buyer, which could be the bank itself, the former owner must abandon it within the period that the Court deems appropriate, otherwise the eviction will proceed.
If the home is auctioned and the owner is evicted, not only will he be left homeless, but he will have to pay off the debt and it will appear in a file of defaulters until then.
To avoid this, the best way is to sell the repossessed house, this way you can pay off the debt and disappear from any file of defaulters. It goes without saying that this is a complex procedure and that it is most advisable to have professional advice.
For the sale of the seized home, even if it is a preventive seizure in which there is not yet a final ruling, the first thing is to inform the bank and have its consent about the action, although if you do not agree, you can ask the judge to authorize the sale, which will delay the process. Likewise, the buyer must also be notified about the condition of the home.
After the sale, if the debt is completely settled, the owner must request proof of said settlement from the same financial institution, and verify that it no longer appears in any delinquency file on the website of the National Association of National Establishments. of Credit (ASNEF). For his part, the buyer must go to the Property Registry and prove that the apartment is free of debt with a Simple Registry Note.
However, it must be kept in mind that the alternative of selling the repossessed home also carries its risks and drawbacks. Not only do you have to face the payment of the debt, but also the expenses and taxes that the sale entails. So, if the value of the property is less than the deficit, the remaining part will have to be paid out of pocket, otherwise, the bank will continue to claim it, although it will always be better to be able to reduce the amount owed so that the remainder is as small as possible.
Thus, an attempt should be made to ensure that the sale price is somewhat higher than that of the debt, to encompass the consequent payments of the operation. However, it should be taken into account that a significant increase in house prices may lead to a shortage of potential buyers.
The sale price can be lowered, but at least it should be the same as the amount of the debt for the action to be beneficial. The downside is that the buyer may be scared by the character of the home and may be interested in lowering the amount.
If the appraisal of the home is lower than the mortgage debt, you can try to negotiate a reduction with the bank. This is a measure through which the financial institution forgives the part of the debt that remains outstanding after the sale.
That is, if the home is valued at 130,000 euros, but the mortgage debt is 150,000 euros, the bank could agree to forgive the outstanding 20,000 euros in exchange for keeping the amount of the sale. However, there is a possibility that the bank will waive only part of the outstanding debt, usually 25% or 50%, or even reject the write-off.
The haircut is an option that banks usually grant when the difference between the appraised value and that of the debt is not very excessive, and to those owners who have certain economic and/or family characteristics:
