Spanish Land Registry and the Secondary Market Isabel González García Land Registrar Experiences with data management to improve land administration in ECE countries Sofia, 23-24 april, 2009

In the European Securitisation Forum Autumn 2007, report’s ranking of European securitisation issuances by country of collateral, the Spanish securitisation market had consolidated its second place position, and that is due to the strong position in the residential mortgaged-backed security sector.

Spain’s Mortgage Market Different types of lenders offering a great variety of mortgages, Banks and Saving banks (Cajas de Ahorro). There is a high need for the mortgage funding, due to the preference of acquiring a dwelling in property than renting. The legal framework for this is the Spanish mortgage market law according to article 47 of the Spanish Constitution, which establishes the right to access a dwelling.

Regulation Spanish mortgage market law (25th March 1981) Law 41/2007 7th December

Mortgages types Variable rate –European Central Bank index is the most commonly used-. Fixed rate. The interest rate does not vary throughout the lifetime of the mortgage.

Lending Institutions and Appraisal Firms.- The lending Institutions offer different types of credits and loans. Those loans are “covered” by mortgages that act as guarantee. Lending Institutions can go for refinancing by issueing two types of bonds: Covered bonds Mortgage bonds

Covered bonds: Guaranteed by the mortgage portfolio of the issueing entity – except by those that cover the mortgage bonds- Do not need special registration Any mortgage registered at the time

Mortgage bonds: Guaranteed by the mortgage specially mentioned on the deed. Do not need special registration. Potential isssuers of mortgage bonds have traditionally disregarded this type of refinancing mechanism in favour of other types of mortgage related securities. The rationale of the decision is usually based on the higher administrative costs derived from law 2/81 associated withe the issue of mortgage bonds.

Appraisal firms: They become the key in order to ensure the loans and credits are adjusted to the value of the property that serves as a guarantee. These companies are submitted to very strict regulation to saveguard their indepence. When the lending credit institution has issued bonds and has a rating company of its own, they must create a technical commission to verify their acting.

Secondary Market Covered and mortgages bonds Mortgages in guarantee Credits and loans

New times, new legislation Development of the mortgage bond market More flexibility to the issuers of mortgage- related securities. Improvement in the legal position of the holders of those bonds.

Aims.- To preserve the importance of a strong mortgage market. Legal developments that modernise the regulatory framework for mortgages. More flexibility in the means of refinancing for the Spanish financial institutions. Wider range of mortgage-related products.

Other innovations: Larger mortgage portfolio not only real state assets located in Spain, but also in the territory of the European Union. Liquid assets: the issuance may be backed by certain types of low risk and high liquidity fixed income securities, the so called “replacement assets”. More investors Additional use of the funds

Thank you very much for your attention!