State Banks
Condition The Lowering Of Interests
Mutuals
Prevented From Renegotiating Loans
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Mutuals
Prevented From Renegotiating Loans
Customers of "mutuales" (mutuals) are facing
a stone wall in their attempts to
renegotiate their loans due to the current
economic crisis, but not because the mutuals
are willing to renegotiate, it's that the
law impedes it.
The Ley del Sistema Financiero Nacional para
la Vivienda prevents any mutuals from
entering into any financial arrangement with
its customers, tying their hands and forcing
the group to seek an action of
unconstitutionality.
The law is clear, loan amounts cannot exceed
90% of the value and terms cannot be longer
than 15 years.
This is in contrast to banks, who under
special circumstances can lend 100% of the
hone value and no restrictions on the term.
In the action seeking relief, the mutuals
say that they are being prevented from
extending their debtors an amended payment
arrangement and granting grace periods.
The action was filed by the Federación de
Mutuales de Ahorro y Préstamo, representing
the mutuals.
Oscar Alvarado, general manager of the
Mutual Alajuela, explains that the law ties
their hands and cannot compete with the
banks, making mutuals uncompetitive.
The problem has been known for some time and
though there is support by the Poder
Ejecutivo (the government) to reform the
law, the changes are stalled in the
legislature.
Alvarado said all the mutuals want is to
loosen the restrictions and be able to deal
with their customers like the private and
public banks.
The Mutual Alajuela manager added that
customers cannot understand why they cannot
renegotiate their loans and repayments, with
a lower rate, longer repayment and thus
lower monthly payments.
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