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From «Creditworthiness» to «Collateral Credit». The Role of the Real Estate Collateral in the Credit Market

  • Abstract

Informations and abstract

Keywords: Directive 2014/17/UE, Art. 120-Quinquiesdecies TUB, 48-Bis TUB, Reverse Mortgage, «Collateral Credit», «Creditworthiness», Real Estate Collateral.

In this paper we aim to examine an underlying antinomy in the credit market, i.e., the contrast between «collateral credit» («credito alla cosa») and «creditworthiness». First, we analyze the principle (descending from Directive 2014/17/UE) by which, in assessing the creditworthiness of the borrower, the bank should not give primary importance to the collaterals (in particular, real estate collateral) provided by the borrower. On the other hand, the paper describes the evolution of Italian legislation on land credit («credito fondiario»), to demonstrate that – in the recent past – there were credit contracts in which real estate collateral had a primary role. The contrast between «collateral credit» («credito alla cosa») and «creditworthiness» seems at first sight evident, and constitutes the antinomy mentioned above. For further explanation, the article examines three recent Italian legal institutions that set the real estate guarantee as structural element of the transaction: reverse mortgage (prestito vitalizio ipotecario), and the provisions laid down in art. 120-quinquiesdecies and 48-bis TUB. In all these three contracts, the main credit satisfaction mechanism is based on the real estate collateral – in opposition to what is conveyed by Directive 2014/17/EU. We are witnessing two opposing drives: one leads to a strengthening of the bank’s responsibilities in the evaluation of the creditworthiness; the other one disregards the personal qualities of the borrower, and focuses on the value and profitability of the asset set as collateral to the credit. In conclusion, the study brings out the importance of the «collateral credit» («credito alla cosa») in current Italian law system, but also shows the need for a corrective. We propose that, where there is no obligation to check creditworthiness, the bank should, however, respect a criterion of proportionality and suitability in the granting the «collateral credit».

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