The Chamber of Deputies, Wednesday nightapproved the bill to resolve the drama of almost 100,000 families taking UVA mortgage loans. The initiative achieved medium sanction with 134 positive votes, 40 rejected it and there were 18 legislators who abstained. One of the key points is that this project proposes that the fee to be paid must not exceed 30% of the debtors’ income.
The project was rejected by representatives of the PRO, the Left and the party headed by Javier Milei.
Before the vote, a wave of abstentions was already expected in the opposition coalition and some radical votes in favor, which managed to attract the Mendoza Julio Cobos, main promoter of the law. The Left Front and the liberal blocs, on the other hand, opted for rejection.
The bill, which must now go through the Senate, was the result of a arduous negotiation between Cobos and Carlos Heller, Chairman of the Budget and Finance Committee.
“Today there is no mortgage credit because the contractual equity between the evolution of wages and the evolution of inflation was brokenand that equity is what must be maintained in all long-term contracts,” Cobos stated.
As specified, in 2016 9,000 credits were granted; in 2017, 75,000; in 2018, 81,000; in 2019, 10,000; and as of 2020 “practically none”. “What happened was that as of September 2018, the salary lost against inflation, and that is why measures and suggestions from the three powers appeared,” he added.
The debate confronted Cobos with the economist Martín Tetaz, aligned with Senator Martín Lousteau, who had led a minority opinion with some similarities but also differences, especially in relation to the contribution of the banks.
“Our approach was not to create a problem where the problem does not exist. Yes, the people who took out a mortgage loan are suffering to be able to pay the fee and are poor, just like the 40 million Argentines who have seen their real wages fall between 20% and 25% in recent years. But This fall affects equally the one who took a UVA credit and the one who rents”, Tetaz raised.
Point by point, what the project says about UVA credits
Creation of a trust fund:
The owed quotas will be adjusted by the RIPTE index (formal salary of the economy). If the difference between the quota calculated based on salaries is less than that calculated by UVA, the debtor will pay salary adjustment and the difference will be compensated with monthly contributions from the banks, through a “Mortgage Compensation and Promotion Trust Fund”.
But if the quota calculated by salaries is greater than that calculated by UVA, the lowest also prevails, that is, the debtor will pay based on inflation.
Contribution of the banks:
The banks’ contribution will be up to 0.0025% of the average daily balance of deposits in pesos and in foreign currency. In addition, the Central Bank may integrate the Fund with the premiums provided by borrowers of new credits.
“The problem is huge for the more than 95,000 families taking credit, but it is negligible for the financial system: UVA loans represent 2% of loans and only 0.9% of deposits,” Cobos said.
For credits already granted, the calculation based on salaries will take the 1st as the base period. January 2023. The Mendoza proposed that the calculation be from August 2019, when the first freeze occurred.
Quota amount:
The amount of the fee may not exceed 30% of the income of the debtors. If that happens, the credit term must be extended, although by no more than 25% of the originally agreed term.
Besides, if the debtor is unoccupied, the Fund will pay up to the first three installments acceded in mora.
Income tax:
In addition, interest on mortgage loans may be deducted from Income Tax up to the limit of three minimum wages (currently 20,000 pesos, which will rise to 240,000 pesos).
Trials:
Also eviction and foreclosure trials are suspended for one year; and the families that accede to the law are forced to desist from any judicial action in process.
Other points:
Tetaz’s proposal shared the update of fees by RIPTE; the extension of the term of the credit in case the quota exceeds 30% of the family income; and the creation of a Compensation Fund, that would intervene only in the cases where inflation rises more than wages (and not vice versa, as was approved).
“Since, by its design, the compensation fund is balanced and self-financing, the contribution of the banks will be only once or if an exceptional situation occurs that requires it, ”Tetaz proposed in his opinion, which was unsuccessful.
Buenos Aires Correspondent