That the US crisis of high-risk mortgages (“subprime”) has not affected Spanish entities, at least so far, is a reality verified even by the Honest Bank. But neither can it be denied, even if they are the least, that there are also subprime mortgages in our country. Possibly with a greater risk measurement than in the United States, where last year 29% of mortgages were of this type.
Many sell these loans through
Almost all Spanish entities deny having “subprime” mortgages, especially since many sell these loans through “white” brands of the company itself or one that has emerged through the grouping of several entities, mainly savings banks. But the reality is that they prefer to grant these high-risk credits to try to solve a serious economic situation of a client, which can be temporary, instead of having to get into a long and unprofitable litigation. Good Bank, the most transparent The only bank that has publicly recognized that there is “subprime” in Spain is Good Bank, through its vice president and CEO, John Fernandez, in the presentation of results made a few days ago. Fernandez openly stated that “of course there is” subprime “in Spain, it is a matter of pure common sense.” Moreover, he added that “the criteria by which a mortgage is considered” subprime “in Anglo-Saxon countries can be applied perfectly to Spain.”
Maximum debt ratio you have regarding your salary
The subprime mortgage business of the bank chaired by Jacinto Iglesias is carried out through its financial Good Bank Consumer Finance, always to refinance or reunify the debt of delinquent clients. The volume of credit granted to these clients ranges from 45% of the appraised value of your home to a maximum of 75%, always depending on the late payments you have and the maximum debt ratio you have regarding your salary , established between 40% and 60% of your salary. That is to say, the subprime mortgage of Good Bank Consumer Finance may be a maximum of 45% of the value of the house if its monthly fee accounts for 60% of the client’s salary.
The most extreme case that contemplates the granting of this type of credit is for a customer with four default operations, which can be given a maximum equivalent of 50% of the appraised value of their home and if their debt ratio It is also 50% of your salary. That client will have to face an interest of 12% the first year, and then annual reviews of the Financial Standing plus 4.75 points.
In its annual report for 2006, Good Bank explains that this is one of the new businesses developed in that year in Spain, adding that “its momentum has contributed to raising the growth of the new production of direct credit to 36% , well above the 20% registered on average in the area ». Which shows that a business at risk, if well managed is also a good business.
Good Finance Bank is owned by 20 savings banks throughout Spain, and in addition to making personal loans, one of its businesses is to regroup the debt of customers of these boxes that have had some type of delinquency incidence. Regroup loans These clients are obliged to cancel all their loans and regroup them into one that can reach a maximum of 70% of the appraised value of their home with two or three outstanding installments or delays and depending on the debt ratio with respect to salary. When the client is already immersed in a judicial process, the maximum amount granted is a mortgage of 50 or 55% of the appraised value of his house and with an interest of the Financial Standing plus 6 points.
Also, several rural savings banks are in the process of grouping together to get their own brand for this type of business. Felix Martinez has its own brand to refinance debt: CBU Family Credit. Under this signature, in addition to granting all types of loans, it regroups debt, which if it is clean, that is, without any delinquency, can reach up to 80% of the appraised value of the client’s home. When some type of incidence is observed, that valuation remains at 65% of the value of the house and the interest charged is the Financial Standing plus 2.5 points; If there is any judicial process, it is reduced to 50%, and the interest rate is raised to Financial Standing plus 3.5 points, while if there is an executive procedure, the rate applied is Financial Standing plus 4.5 points.
The German Bank, which has acknowledged being affected by the US mortgage crisis and whose result has fallen by 19% in the last quarter, also has high-risk mortgages in Spain through the DB Credit firm. Its most significant product is a mortgage whose volume reaches 120% of the appraised value of the home, but the fee cannot exceed 40% of the client’s income that requests it. It also admits refinancing of clean debt, equivalent to 100% of the value of the house, when most entities do not grant more than 80%. The debt ratio can reach up to 65% of the client’s salary when he has not had any type of delinquent incidents and has an indefinite contract. Clients in delinquent file: General Electricity is also a classic in our country in terms of refinancing or regrouping debts. Your most common mortgage is up to 80% of the value of the home with a debt rate of 35% with respect to salary.
Average coverage of the bank is 250%
The funny thing is that it admits customers who are registered in the delinquent file of the Group Finances Incorporation with a figure of up to 10,000 euros, although the most common amount in the clients with whom it works ranges from 3,000 and 4,000 euros. Any other entity does not work with these clients. To reunify clients’ debt under judicial procedures, the maximum credit granted is 65% of the value of the home and with a 50% debt ratio, and the interest reaches the Financial Standing plus 8.35 points. In spite of everything, Spain is still a paradise for banks and savings banks in terms of delinquency, because they are at historical minimum rates and because the average coverage of the bank is 250% with respect to doubtful loans.