Italian - ItalyEnglish (United Kingdom)

Mortgage Credits

MORTGAGE LOAN

The mortgage loan can be accorded asking for a real estate mortgage as security.

The mortgage is “a real security right focused on registered real estate or personal property”; a security that gives to the bank the possibility to forcedly recover its credit through the pre-emptive right, which is the good expropriation and its sale when the debtor is in default.

Generally, to supply a loan, a credit institution takes precautions through a mortgage which can concern other real estate or the one that is being bought with the required loan. In this way the Bank has the possibility and the right to expropriate the property if the loan won’t be paid back.

REGISTRATION OF A MORTGAGE

Mortgages become official through the registration in the “Registro degli immobili”, that can be consulted in the municipal district where the property is situated.

Its possible to register more than a mortgage with only one property; creditors will be identified according to the order of the mortgages registration (first, second, third... mortgage).

MORTGAGE: DURATION, REDEMPTION, VERSATILITY

A mortgage is redeemed through the payment of the final instalment.

Thanks to the “Decreto Bersani” the figure of the notary to redeem a mortgage is no more necessary, and it entails a cost saving.

As for the subrogation, once you pay off a loan, it is no more necessary to redeem a mortgage and register a new one if you want to take out a new loan. With the rules introduced by the “Decreto Bersani” one should change the plaintiff on the mortgage contract notifying the bank.

MORTGAGE CREDIT

If the debtor doesn’t pay the installments of the granted loan, the Bank starts an executive procedure to sell the property by auction. This procedure can go on for years (there is an average of 3 years in Rome).

It is well known that, in the last few years, because of the big economic crisis, these non-payment situations have gone up in a very exponential way, and it is the main cause of the economic balance of the banks.

To reduce the economic balance, the bank decides to give the credit with a reduction. Through the cession the economic right and the mortgages are transferred.

UNSECURED CREDIT

The unsecured credit isn’t assisted by any pre-emptive cause.

Legal Foundation

When the debtor doesn’t pay back the loan to his creditor, this one can obtain the payment through the activation of an individual executive procedure or, when there are the specific conditions, through a bankruptcy procedure.

According to the law, the debtors in default could be subjected to the expropriation of one or more goods, that is all the property, to satisfy the creditors through the procedure of the above- mentioned goods sale. In fact, the art. 2740 civ. cod decrees that the debtor answers to the obligations with all his future and existing goods. Thus, one can affirm that the debtor property constitutes a generic security for creditors, that, in case of default, are defended through specific mechanisms provided by law and which can make up for the debtor goods.

Moreover, the civil code states the par condicio creditorum principle (art. 2741) which affirms that, when there are more creditors that expect the satisfaction of their reasons, everyone has the same right to obtain this satisfaction through the procedure from the debtor goods sale. However, the last mentioned rule saves the cd. pre-emptive causes, it means that, through these causes, the law assures to some credits the right to be more important than the others.

The pre-emptive causes listed by the law are:

  • The pledge
  • The mortgage
  • The privileges

When the law doesn’t provide for the credit assistance through one of these causes, it is called unsecured credit.

Very often, after the expropriation and the sale of the debtor goods, more than a creditor have to share out the sale profits. If the profits are not enough to satisfy everybody, they are allotted in a specific way.

Within the distribution procedure, the secured credits, or the ones assisted by the mortgage, are the first to be paid and follow a specific order established by the law. On the contrary, the unsecured credits obtain satisfaction at the very end and only if there is a cash surplus. If this surplus is not enough to satisfy all the unsecured creditors, they obtain the payment of a percentage calculated from the credits amount and the rest of the balance.

Most of the work credits are assisted by a general privilege on the personal property (art. 2751 bis civ. cod.) to guarantee a labour protection even when the employer defaults on the payment.

ADVANTAGES OF MORTGAGE CREDIT PURCHASE

The investor purchase of a mortgage credit could provide him with a reasonable profit, and it could be the result of many factors:

1. If a creditor (who bought the credit) is not interested in buying the property and he completes the levy phase arriving to the auction, the profit could derives from:

The appreciation derived from the credit purchase price (transfer contract) and the profit price (property sale by auction), besides the accrual of interest until the date of the property sale, which represents the object of the levy.

The appreciation which derives from the difference between the credit value and the bank purchase price.

The saving derived from the property purchase with a direct or indirect procedure.

I. 2. If a creditor (who bought a credit) wants to buy a property with a mortgage, the profit could derives from:

II. I.A) The creditor can buy the property through a negotiation with the debtor or, if the credit is higher than the property value

III. II.B) He can have recourse to the assignation right (art. 589 and ss. codice di procedura civile con ordinanza emanata dal Giudice), in this way he becomes automatically the property owner.

IV. III.C) The creditor, who in this case is also the allottee because of the articolo 41 del T.U.B., will pay the amount to the land creditor (that is himself because he has this right) and, so, he will pay the property not for the auction assignation value, but for the price of the mortgage credit.

V. IV.D) The appreciation earned by the property sale on the open market.

SERVICES FOR THE MORTGAGE CREDITS PURCHASE

The GarCon RE S.r.l. uses the experience of professionals to interact with the most important banks and to provide his clients with the best and more profitable opportunities to purchase and manage the mortgage credits.