The House approved a new legal framework for loan guarantees on Tuesday night, clearing the way for President Luiz Inácio Lula da Silva to sign it into law.
The bill was originally proposed by the Jair Bolsonaro administration in late 2021. It was approved by the House and heavily amended by the Senate, prompting a new vote by lawmakers. Congressman João Maia, the bill’s last rapporteur, approved 37 of the 50 amendments submitted by senators.
Back in 2021, 41 of 43 Workers’ Party lawmakers voted against the original version of the bill, which made it easier for banks to foreclose on homes. Under current law, if a family lives in the only property they own, it cannot be foreclosed on except to the original owner of the mortgage contract. The original bill would have changed this rule, but senators reversed the change.
The Luiz Inácio Lula da Silva administration announced its support for a modified version of the bill in April as part of a package of measures to boost credit. Currently, a given asset can only serve as collateral for a single contract. Under the new rules, an asset worth BRL 200,000, for example, could serve as collateral for several loans, even to the same creditor. In a statement, the Finance Ministry said the bill will “reduce the cost of credit” by making it easier to use assets as collateral.
The new legislation also creates out-of-court mechanisms to facilitate the settlement of debts. For example, a debtor can send an offer through a notary. Also, a debt collection message will now be legally recognized if it is sent by an instant messaging app, such as WhatsApp.
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