On Jul. 28, ITA ABI updated on local authority mortgages payments.
ITA ABI issued circular letter on suspending payments of local authority mortgages.
Document dated Jul. 28, 2023, received from ITA ABI Aug. 7, summarized on Aug. 8.
Overview
Circular letter informs its members of framework agreement on suspension of payment of principal portion of mortgages of local authorities, reached with National Association of Italian Municipalities (ANCI) and Union Provinces of Italy (UPI).
Key Aspects
Due to local authorities liquidity needs caused by emergency due to increase in energy costs and to face difficulties generated by the flood events started on May 1, 2023.
Agreement defines guidelines on the basis of which adhering banks can proceed with suspension of payment of principal portion of outstanding mortgage installments.
Payments due from Jul. 27, 2023, date of signing, up to and including Dec. 31, 2023.
The agreement also determines the extension of the amortization plan by 6 months.
However, re interest on suspended capital, it must be paid at original due dates and the maturity of loan following suspension cannot in any case exceed 30 years.
Per agreement, loans subject to suspension must have certain characteristics (listed).
At time of submitting application, organizations must not be subjected to dissolution procedures due to phenomena of mafia infiltration or similar.
Also excluded from measure are agencies in default or in difficulty without stable rebalanced budget hypotheses approved at the time of submission of the application.
Applications for suspension must reach the adhering banks by Sep. 30, 2023.
However, possibility remains for adhering bank to offer, independently, improved conditions compared to those set out in the agreement.
Without prejudice to limits established by regulatory framework, reference regulation.
Effectiveness
Payment suspension in force from Jul. 27 to Dec. 31, 2023; applications by Sep. 30.
Apr. 2024 New Suspension
On Apr. 11, 2024, ITA ABI issued circular letter to inform members of new framework agreement on suspension of payment of principal amount of local entities' mortgages.
Agreement with ANCI and UPI, continues to support local authorities in difficult situations generated by the increase in energy costs.
Defines guidelines on basis of which participating banks can proceed with suspension of payment of principal portion of existing mortgage installments, expiring from Apr. 9.
That is, from date of the signing of the agreement, up to and including Dec. 31, 2024.
Agreement also determines 12-month extension of repayment plan but as for interests on the suspended capital, these must be paid at original deadlines; more details.
At time of application, submission entities must not be subjected to dissolution procedures due to mafia or similar infiltration.
Defaulting or failing entities without possibility of stable rebalanced budget approved at the time of submission of the application are excluded from the measure.
Requests for suspension must be received by participating banks by May 10, 2024.
Participating bank can offer, on its own, improved conditions compared to those in the agreement, without prejudice to the limits set by the regulatory reference framework.
