The world of housing and everything that surrounds it is not a piece of cake, much less in these times. For this reason, the real estate sector has spent years promoting the so-called Code of Good Practices (CBP). Next, we discover what this initiative consists of and how to access it from the experts at Housfy, the online real estate platform of the moment.
The Code of Good Practices, or CBP, is a set of guidelines and standards for the restructuring of the debt of those mortgaged in a situation of economic vulnerability. A package of economic aid that banks can offer and whose objective is to support those who find it excessively difficult to pay their loan.
It arrived for the first time in 2012, as a response to the Spanish financial crisis. Its last modification was in November 2022, after the rise in mortgage interest rates as a result of the increase in the Euribor and the new policies of the European Central Bank.
The truth is that not all families are eligible for CBP. This resource is aimed at two large groups of potential beneficiaries: families on the threshold of exclusion and those at risk of vulnerability.
Let us now see the different conditions that both families in the exclusion threshold and families at risk of vulnerability must meet.
These requirements are designed to ensure that CBP aid and measures go to those who need it most and are facing real financial hardship. Thus, meeting these criteria is the first step to accessing the solutions and relief offered by the code.
If you do not meet the requirements, there are more options for those who want to improve the conditions of their mortgage. We discuss them below.
The first and most frequently used is the improvement of the loan conditions with the current bank, which is known as novation. There is also the option of changing banks, in what would be a subrogation. A highly recommended function that can be developed with the help of mortgage experts, such as those found at Housfy, who negotiate with banks to offer better conditions.
Another alternative could be to rent or sell the house. This is one of the best ways as long as there are no pending charges related to the mortgage.
What is the Code of Good Practices for? The initiative includes three measures: the restructuring of the mortgage, the removal of the debt and the dation in payment of the house. Again, these measures vary depending on what type of family it is.
First, debt restructuring. Its main objective is to remodel and prepare the loan with new conditions according to the current economic situation.
Secondly, it removes the debt. By resorting to this measure, the bank could forgive a percentage of the outstanding loan, for example up to 25%. However, the entity has the power to accept or reject the removal proposal.
In third and last place, dation in payment, a resource that is used when the previous options are not possible since the debt is unaffordable. It consists of the cancellation of the debt by the financial institution in exchange for keeping the house, without the need for the mortgaged person to stay on the street, since they can request a social rent. In this case, the entity will have the obligation to accept delivery of the home to cancel the debt.
With the latest update of the CBP in 2022, two more aids are included for families at risk of vulnerability: the extension of the repayment period up to seven years, without exceeding 40 years in total; and the change from variable rate mortgage to fixed rate. Both are available until November 24, 2024.
Accessing the Code of Good Banking Practices involves presenting a series of documents that support the applicant's family and economic situation. These will be essential to assess the client's need, as well as to facilitate the process of applying the measures contemplated in the Code. They are the following:
