The digital mortgage is already a reality in many countries and is changing the way we contract this type of credit. With the use of technologies such as digital documents and electronic signatures, the process becomes faster, safer and much less bureaucratic.
In Brazil, the mortgage has lost strength in recent years and many banks have stopped working with this type of credit, due to the difficulties and legal insecurities that involve the system, especially when compared to the fiduciary alienation.
In this article, we will better explain what digital mortgages are and what their advantages are. But before that, it is worth understanding how the mortgage works in Brazil. Have a good reading!
But after all, what is a mortgage?
A mortgage is a traditional model of credit in which the debtor places a high-value good, usually a property, as a guarantee of payment. In this way, it can negotiate lower rates and longer terms, since the risk for the creditor is minimized.
If for some reason there is a default, the creditor can demand possession of the property. This reduces or even eliminates your financial loss. This way, the credit operation becomes much quieter for both parties.
In addition, the mortgage can also happen as a result of court convictions in which the owner of the property needs to indemnify the winner of an action and has no funds to cover the amount. In such cases, it may happen that a judge orders the mortgage of the convicted person’s real estate.
In the United States, the mortgage is an extremely common line of credit, especially for the acquisition of real estate. Much of the Americans have mortgaged real estate and between 2007 and 2008 mortgages were one of the factors that triggered the so-called subprime crisis.
On the other hand, in Brazil, mortgages are not very common and most banks do not even offer this model, preferring to use the so-called property-backed loan or fiduciary alienation.
Why has the mortgage fallen into disuse in Brazil?
Unlike other countries such as the United States, in Brazil the legislation does not give as much security to the creditor and, even with the property as collateral, there is the possibility of default. Therefore, few financial institutions still adopt this model.
The main reason for this is that when a debtor mortgages a property, the property remains in his name, which can make it difficult for the financial institution that offers the credit to take it.
If the debtor becomes a defaulter and it is necessary to take the property to cover the loss, it is necessary to file an eviction action in court, which may take years to be enforced, especially if the person who lives in the place and has nowhere to go if that house is lost.
In addition, other types of debts, such as labor debts, have priority over mortgages, which further increases the risk of such transactions.
Finally, the owner of a property is allowed to make the sale to third parties even if it is mortgaged, without the need to previously communicate to the company that provided the credit.
In such cases, the borrower must pay off the entire loan on demand, but it is possible that he will give the default, which greatly increases the insecurity of the company.
For these reasons, the similar and most used model in Brazil is the loan with guarantee of the property, or fiduciary alienation. In this system, the owner transfers the fiduciary ownership of the property to the financial institution.
This causes the bank to have indirect possession of the property, while the debtor retains direct possession, with total freedom to live and enjoy the property. The difference here is that, as this transaction is registered in a real estate registry office, the bank can resume the asset in case of default with more agility, in an extrajudicial way.
How does the digital mortgage work?
In many countries, such as the United States, the mortgage has gradually been digitized and the process has become much more agile and reliable. Instead of having to visit the bank, take documents from one place to another, and collect multiple signatures, the parties involved quickly resolve themselves in an online system.
It all starts with the potential borrower filling out a digital form with all the data on the property and the value it needs. This material is quickly evaluated by a system that automatically calculates risks and checks the financial situation of the owner and the property.
The completed form is then transmitted to the financial institution’s analyst, who reviews the automated system’s considerations and gives the final word about the loan.
If all goes well, the agreement is signed digitally and the money is transferred to the borrower. Everything happens in a short time and with much less effort and bureaucracy than the traditional method, with paper contracts and extensive conversations.
In Brazil, it is likely that the mortgage will also become digital, simplifying the process. But, considering current legislation, it should continue to be overlooked in comparison to a secured loan for fiduciary alienation.
Even so, the trend is that the secured loan is also fully digitalized, as well as most other types of documents that pass through the hands of notaries.
With a digital system, with electronic signatures, the reliability of the contracts will be much higher, as well as their security, which is something desired by both banks and debtors, since it will reduce the chances of fraud and the risks of the operation.
Moreover, as it will not be necessary to physically go to the notary’s office to sign and recognize the signature, in addition to formalizing the document, the loan process can be fully digitalized, done over the Internet.
The technologies for this revolution are already available and it is only a matter of time before the Brazilian legislation makes the adjustments and adopts the changes.
