… From the belegal.com website
In plain English, a dacion en pago means handing back the keys to the lender, and in exchange the lender will fully discharge all mortgage debt, not holding you liable in the future. The lender will also renounce pursuing the debt in your home country or elsewhere against any other assets you may hold. This procedure is based on Art 1175 of the Spanish Civil Code, which establishes that a borrower can cancel his creditors’ debt handing in exchange any of his assets.
Jonas can I ask a personal question.
Has your sister-in-law’s financial situation recently changed that has forced her into this situation? Or did the bank really lend her 240,000 Euros knowing her financial position?
Anyway looks like she has had a lucky escape, if you can call a loss of 60,000 Euros (deposit + payments) lucky.
Hi, yes ask away.
Basically, back then she was still a single mum with her daughter, she had a partnership with her parents in a restaurant, which was going really well back then, but due to the recession things have gone down hill financially. So she got to a point where she couldn’t afford the mortgage.
She is spanish, so don’t know if this maybe helped the situation.
So in answer to your question, they loaned her the money she could afford with the income she had back then, but over estimated the price of the house on the tasacion. The bank actually admitted to her that the tasacion was way too high back then.
I think the reason they have just allowed her to hand back the keys in exchange for the cancellation of the debt is because they know that the chance of them getting their money back off her would probably takes years, if they ever do get it back. Apparently you are allowed to earn a mininum amount in Spain before the bank is allowed to take their monthly payment off you from a repossesion. And the lawyer said as she is also a single mum that counts aswell.
To be honest I am as baffled as you are as to why they have just “let her off” in a way, but they have.
But fair point, she has lost money what with the deposit and fees etc…but not as much as she would stand to lose if they had of rejected her request for dacion en pago.