On 25 March 2020, the Italian Ministry of Economy and Finance (MEF) issued a ministerial decree, published on the Official Gazette of 28 March 2020 (the "MEF Decree"), enacted in accordance with paragraph 3 of Article 54 of the Law Decree of 17 March 2020, No. 18 (the "Cura Italia Decree") and implementing the home mortgage loans moratorium provided therein.
Article 54 of the Cura Italia Decree - following the emergency due to the COVID-19 outbreak - has integrated and extended the rules of the Italian solidarity fund (the so-called Gasparrini Fund, hereinafter the “Fund”), which allows the borrowers of home mortgage loans to benefit from the suspension of payment of the relevant instalments for up to 18 months subject to certain conditions.
The main measures enacted by the MEF Decree are the following:
Expansion of the access to the Fund
In addition to the existing conditions for benefitting from the Fund, the suspension measures have been extended to:
a) employees (Article 1, paragraph 1) who – due to the COVID-19 emergency:
- have been suspended from their employment for at least 30 consecutive working days; and
- have suffered a reduction of their working hours at least equal to 20 per cent. of the total working hours for a period of at least 30 consecutive days;
b) self-employed and professionals (Article 4), who have recorded in the quarter following 21 February 2020 and preceding the application for the suspension (or in the shorter period elapsed between 21 February 2020 and the date of the application for the suspension, if no quarterly period has elapsed) a decrease in their average daily turnover higher than 33 per cent. compared to the average daily turnover recorded in the final quarter of 2019.
Duration of the suspension (Article 1, paragraph 2)
The suspension of the payments of the loan’s instalments may be granted up to a maximum of:
a) 6 months, if the suspension or decrease of working hours are comprised between 30 days and 150 consecutive working days;
b) 12 months, if the suspension or decrease of working hours are comprised between 151 days and 302 consecutive working days;
c) 18 months, if the suspension or decrease of working hours is higher than 303 consecutive working days.
Without prejudice to the maximum total duration of 18 months, the borrowers may benefit from the suspension more than once, even for non-continuous periods, within the limits of the Fund's resources.
Pursuant to Article 5, any previously granted suspension will not be taken into account for the calculation of the 18-month maximum suspension period if the instalments' amortisation of such previously suspended loans was restarted regularly for at least three months at the time the application for the new suspension is submitted.
How to benefit from the suspension
In order to benefit from the suspension, the borrower shall submit the following documents, together with the application:
a) for employees (Article 1, paragraph 4):
- a copy of the administrative act authorising the access to financial support measures; or
- an employer's request to be admitted to financial support measures; or
- an employer's declaration certifying the suspension and/or decrease of working hours due to causes which cannot be ascribed to the relevant employer liability and specifying the period of suspension and the percentage of the reduction of the working hours;
b) for self-employed and professionals (Article 4, paragraph 1) a self-certification of the relevant loss in revenues in the reference period.
It is not necessary to submit an Equivalent Economic Situation Indicator (ISEE, a document which is usually required to have access to the Fund) due to the extraordinary situation that led to the extension of Fund measures(Article 5).
Amount of the benefits (Article 2)
If the borrower suspends payment of the loan instalments, the Fund will refund the banks compensatory interests equal to 50% of the interest accrued on the outstanding debt during the suspension period. The compensatory interest will be determined on the basis of the contractual interest rate applicable to the relevant loan at the time of submission of the suspension request.
The suspension is granted free of any cost or application fee and without request for any guarantee from the borrower.
The calculation procedure set forth under Article 2 of the MEF Decree shall apply to (i) the applications which are submitted following the date of entry into force of the Cura Italia Decree and (ii) to suspensions granted prior to the entry into force of the Cura Italia Decree in relation to which, as of the date of entry into force of the MEF Decree, the Fund has not yet paid any amount in accordance with the applicable laws.
The Cura Italia Decree shall be converted into law within 60 days from enactment (i.e. by 16 May 2020) and therefore the measures that have been provided therein may be subject to further adjustments.
Authored by Federico Del Monte, Corrado Fiscale, Giulia Arenaccio and Annalisa Feliciani