Housers, since its launch as a real estate investment platform, keeps on innovating with the aim of offering the best service and the best profitability to its investors.
During the last months we have expanded the portfolio of investment products with Housers Green (renewable energy projects), Housers Corporate (business projects) and now we offer projects with mortgage guarantees.
WHAT IS A MORTGAGE GUARANTEE?
A mortgage guarantee is the right granted to investors over a property so that in the event that the developer fails to comply with the payment commitment or fails to pay the debt, the investors can execute the mortgage guarantee to recover their money. The legislation governing Participatory Finance Platforms in Spain prevents them from taking guarantees of any kind on behalf of investors. For this reason, Housers will use a Guarantee Agent in its projects with mortgage guarantees.
WHY IS A MORTGAGE GUARANTEE USEFUL?
- To provide the investor with a security right by its registration in the Property Registry after the signature in the Notary’s office between the Agent and the Promoter. In the event of non-payment, he can enforce this guarantee, put the property in his name and sell or exploit it to pay off the unpaid debt.
- Block the property preventing mortgages that deteriorate the quality of the debt or change of ownership during the life of the loan.
GUARANTEE AGENT
PFPs, according to the legislation governing them, cannot take guarantees on behalf of investors.
Instead, a trusted and reputable third party takes the guarantee on behalf of the investors and the custody. This is the Guarantee Agent.
The guarantee agent takes the guarantee before the notary and prevents all investors from having to do it. The investors send the guarantee agent to perform their functions.
In case of execution of the guarantee, the guarantee agent, following the instructions from the investors, can carry out the execution, recover the maximum of the property and distribute it through the platform to the investors.
BONDHOLDER
In the case of Housers, the chosen Collateral Agent is Bondholders.
Bondholders is a professional firm with over 25 years of experience providing independent corporate trust and loan agency services. Bondholders is not affiliated with any financial services group. They currently meet the requirements of several international jurisdictions, including Spain, Portugal, Italy, England or New York.
They have extensive experience in financial sectors (Bankia, Santander, Deutsche Bank) and in other sectors as well (FC Barcelona, El Corte Inglés, Vista Alegre, TAP Portugal, Telefónica).
WHO DECIDES TO EXECUTE THE MORTGAGE GUARANTEE?
Once the loan is due, the foreclosure will depend only on the investors who will decide at a lender’s meeting and by majority vote whether to foreclose, to give the developer more time, or to restructure the loan. There is no cost associated with it.
HOW LONG DOES IT TAKE TO EXECUTE A MORTGAGE GUARANTEE?
The execution depends on the time it takes to sell the property given as collateral. This is greatly influenced by the location of the property, the type of property, the appraisal price of the property and various other factors.
It can last 2 years, although it is sometimes performed earlier.
GRAN CANARIA: THE FIRST PROJECT WITH MORTGAGE GARANTEE
Initially, this new type of project will be launched only for projects with a developer located in Spain, although we are already working to launch the same system in Italy and Portugal, adapting the legal structure created to these countries.
The first project launched with a Mortgage Guarantee is the “Gran Canaria” project, which consists of a loan of €600,000 to finance the construction and development costs of 20 homes with 21 storage rooms and 1 business premises. The property is located in a privileged setting 100 metres from Las Canteras beach in Las Palmas de Gran Canaria. The loan will have a repayment period of 18 months and an annual interest for investors of 8%.
