New additions to datio in volutum in Parliament two years after law entered into force

Razvan Zamfir 09/11/2018 | 09:11

Two years after it came into force, the datio in solutum law will be amended through a few additions meant to establish more precise conditions in which the courts may decide whether or not there is unpredictability. If the sale price of the real estate devalued by 50 percent compared to the time of purchase or if the exchange rate differences are more than 20 percent higher compared to the time when the loan was contracted, the datio in solutum is approved.

The increase in indebtedness is included among the conditions for declaring the presumption of unpredictability under the datio in solutum law, as well as being affected by Robor’s growth.

The additions were proposed by MP Daniel Zamfir, the initial co-author of the law.

Around 8,000 pay-out files were requested in the law’s two years of existence, according to the BNR, and only a few hundred cases were resolved in favor of the consumer.

One of the proposed amendments tries to establish the unpredictibility of cases, if the devaluation of more than 50 percent of the initially assessed value of the mortgaged property, or if the exchange rate of the currency of the loan exceeded by at least 20 percent of the rate on the date when the loan was contracted. The proposed changes also indicate that it may be considered unpredictable ”whether the degree of indebtedness exceeded that taken into account at the time the credit was granted and also if the debtor was executed through the sale of the house.”

Basically, if your salary dropped and the payment came to amount to more than 40 percent of your total revenue at the time the loan was granted, you can opt for the payment and let the court decide the assumption of unpredictability. Even BNR governor Mugur Isarescu admitted in summer that despite the fact that it is normal for the ROBOR to grow as long as inflation and monetary policy interest are rising, a two percentage point increase in the base interest rate of a mortgage lending leads to a 6 percent indebtedness increase for the debtor and elevates the risk that the debtor defaults on the loan.

In fact, Isarescu pointed out that there are already significant indications of over-indebtedness in the case of an important segment of the population with incomes below the average wage. Thus, at the end of 2017, the indebtedness of this category (measured by debt-to-income ratio, the so-called DSTI-service for income) was 51 percent. The fact that the debt leverage trend is mainly generated by mortgage lending is a further source of concern, even if salaries in Romania have seen appreciable growth in recent years. 

Finally, if the payout dossier is not accepted, the bank has to prove that there was bad intent on the part of the debtor, after which they will have to pay interest and penalties for the period of suspension. If there is foreclosure on the consumer who has already paid, and the bank still requests payment of the loan, according to the draft law amending 77/2016, the absolute presumption of unpredictability is established. More precisely, all the debtor’s debts are wiped out after the foreclosure of the building.

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