Fitch: New Andalusian Mortgage Law Spells Risk

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Fitch Ratings see a growing risk of weaker enforcement of mortgage contracts in Spain.

In a release today, the agency noted the recent news that a homeowner delinquent on a mortgage belonging to a securitization vehicle known as Mixto III, FTA would be allowed to avoid eviction.  

This is allowed under recent legislaton passed by the Autonomous Community of Andalusia, where the borrower lives. The law gives this regional government the power to determine who is to occupy a property for up to three years "when the previous owners and current occupant is about to be evicted and is considered on the verge of social exclusion," Fitch said.

The agency added: "A number of uncertainties remain around the application of the Andalusian law. For example it is not clear who will pay for the recurrent expenses or rent linked to the property during the period that Andalusian authorities determine it should be rented to the occupier."

Fitch has all RMBS tranches in Spain on Negative Outlook.

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