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The Procrear plan was dissolved: what will happen to real estate projects in development?
The measure was published in a decree in the Official Gazette. There, it was stated that the financing of housing construction “is an activity proper and principal to commercial banks, private and public.” The details on the divisible mortgage system that was recently made official
In addition to the dissolution of Procrear, the Government enabled divisible mortgages for real estate projects
In addition to the dissolution of Procrear, the Government enabled divisible mortgages for real estate projects
The national Government announced the dissolution of the Procrear program, created in 2012 under the management of Cristina Kirchner, which offers lines of credit subsidized by the national State for access to housing.
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The Government made the divisible mortgage system official: what it consists of and what are the requirements
Infobae had anticipated changes in this program; while on Tuesday, November 12, Manuel Adorni, presidential spokesman, had announced the news on social networks: “Two economic novelties: starting tomorrow, the Procrear plan as we know it will cease to exist. In addition to this, divisible mortgages will begin to be allowed for real estate projects under development.”
The announcement was made official through Decree 1018/2024, published in the Official Gazette with the signatures of President Javier Milei, the Chief of Staff, Guillermo Francos, and the Minister of Economy, Luis Caputo. In the recitals of the decree, it is argued that “it is not possible to ignore the difficulty of vast sectors of society to access housing, as a result of unfavorable contexts for access to credit, generated, among other reasons, by the high inflation of recent decades.” In addition, the decree states that “the financing of housing construction is an activity proper and principal to commercial banks, private and public, so the intervention of the State in this matter is not justified.”
It should be remembered that in another decree, 1017/2024 published in the Official Gazette, the implementation of “divisible mortgages on properties subject to real estate projects for subsequent division and allocation to the horizontal property regime or real estate complexes, or for subdivisions originating from common domain plots” was confirmed. The published measure is intended for real estate projects under development. It seeks to improve access to housing, encourage private investment and support economic recovery.
Returning to the decree on the dissolution of Procrear, it mentions that the program “has become a heavy burden on public accounts” due to difficulties in its oversight and control, as well as for generating “unnecessary expenses to the public treasury.” Along these lines, it indicates that the program “has not been transparent, nor agile, nor efficient in addressing the common good.”
Article 1 of the measure states: “The Public Trust Fund called the Argentine Bicentennial Credit Program for Single-Family Housing (Pro.Cre.Ar) created by Decree No. 902 of June 12, 2012 and its amendment is hereby dissolved.”
Article 2 provides that the “Ministry of Economy will carry out all necessary acts for the liquidation of the Public Trust Fund, called the Argentine Bicentennial Credit Program for Single-Family Housing (Pro.Cre.Ar), according to the provisions of this decree and the Trust Agreement of July 18, 2012.”
Article 3 instructs the “Ministry of Economy to enter into a contract with Banco Hipotecario SA for the continuation of the management of the credits under the same remuneration conditions established in the trust agreement signed on July 18, 2012.”
Article 4 also authorizes the Ministry of Economy to dispose of and manage “movable and immovable property, including improvements, within the framework of the provisions of Article 1, as well as the regularization of ownership of the properties.” It also establishes the signing of a contract between the Ministry of Economy and the Mortgage Bank “under the same conditions of remuneration as those established in the Trust Agreement signed on July 18, 2012 for said management.”
A SIGEN report highlights delays and lack of transparency in the Procrear trust fund
A SIGEN report highlights delays and lack of transparency in the Procrear trust fund
Furthermore, within the framework of the new conformation of the State, and in particular of the Public Administration, among the recitals it was cited that article 1 of Decree No. 215/24 “designated the Ministry of Economy as trustor representing the National State in all trust funds integrated totally or partially with assets and/or funds of the National State, exercising in that capacity the direction and management of said trust funds”.
With this provision, the Ministry of Economy, with the assistance of the General Comptrollers Office of the Nation (SIGEN), "would carry out a comprehensive audit of the management of trust funds integrated totally or partially with assets and/or funds of the National State," according to what is published in the decree.
It was also mentioned that in compliance with the request, SIGEN “prepared a report in which it made several observations on the operation of the public trust fund called Pro.Cre.Ar, among which the following should be mentioned: delay in the delivery of homes and premises, which generates higher maintenance, surveillance and expense costs, which could have been avoided if the urban developments had been delivered in a timely manner as provided for by the deadline for completion of work and the streamlining of the beneficiary selection mechanisms; non-compliance with the agreement by the National Technological University (UTN); numerous complaints due to lack of habitability conditions of the units delivered and, finally, the failure to update the procedure manuals.”
It also states that "the management of the aforementioned public trust fund has not been transparent, agile, efficient, effective and of quality in addressing the common good, which is why its dissolution and liquidation falls within the basis of delegation provided for in section a) of article 2 of Law No. 27,742."
The decree adds that “the positive effect that the non-interference of the State in this purely private activity will have for the general public and for the sector in particular cannot be ignored”, concluding that, “once these substantial reforms have been made, there is no justification at all for the State to continue intervening in the financing of housing construction”.
It also establishes that "based on the reforms implemented by the Central Bank of the Argentine Republic (BCRA) since December 2023, with the consequent disappearance of the liabilities remunerated by that entity and the advances in the process of reducing inflation, an increase in the granting of mortgage loans by banking entities is projected, facilitating access to housing."
Article 5 allows the Ministry of Economy, “after the intervention of the National Appraisal Court,” to transfer properties or units to provinces, municipalities, the Autonomous City of Buenos Aires, housing institutes and other national government agencies. In the case of properties contributed by provinces or municipalities, the decree allows “total or partial restitution in favor of the original contributor.”
Article 6 provides that properties under the fiduciary ownership of Banco Hipotecario SA and not affected by ongoing works will be “transferred to the State Property Administration Agency (AABE).” Article 7 authorizes the Ministry of Economy to dictate “the operational and complementary regulations that are necessary for the best implementation of this decree.”
While Article 8 assigns to the Chief of Staff the responsibility of making “the relevant budgetary adjustments, through the reallocation of items from the National Budget.”
Divisible mortgages
Regarding divisible mortgages, it was indicated that “the parties will be allowed to agree to contract insurance or other guarantees under the conditions they determine, exercising their free will and always respecting the rules for protecting the purchaser in good faith.”
Article two of that decree, 1017/2024, establishes that the act by which a divisible mortgage is established must meet certain specific requirements.
1) The ownership of the property must be free of liens or existing liens must be recognized by the creditor.
2) There must be a project that determines the modality of the subdivision, which must include the number, characteristics and purpose of the future functional units or plots of land, which describes the urban development project.
3) It must contain the agreement of the parties so that, once the division of the property has been completed and the ownership has been transferred or the real right of surface has been established in favor of each purchaser, the division of the credit and the mortgage guarantee will proceed jointly, which, from that moment, will individually and independently affect each unit or lot or surface for the balance that may correspond to the latter.
It was also specified that, if the property intended for real estate development is divided, both the credit and the mortgage may be transferred to the new owners, who will assume the balance of the debt corresponding to their own unit or lot, in accordance with the conditions established with the mortgage creditor.
Regarding the creation of divisible mortgages for real estate projects, the decree highlights that the parties may authorize their transfer, securitization, integration into financial trusts and issuance of mortgage notes.
The Government will implement the divisible mortgage system
The Government will implement the divisible mortgage system
Previously, sources from the Ministry of Economy indicated to Infobae that there are “17 thousand homes that are not yet finished.” According to these sources, the Government plans to auction off these properties. The Government seeks to apply a scheme similar to the one implemented in August, when it transferred the management of developments to provinces such as Catamarca, Chubut, Corrientes, La Rioja, Mendoza, Misiones, Río Negro, Salta, San Luis, Santa Fe, Santiago del Estero, Tierra del Fuego and Tucumán, with the objective that local administrations conclude the urban developments.
In Buenos Aires, Governor Axel Kicillof ordered the provincial government to complete housing under construction. In some municipalities in the metropolitan area, such as Avellaneda, “3,000 homes are currently under construction, the completion of which has been possible thanks to own funds.” An official source told Infobae: “Each of the works in progress is still being audited. They are reviewed one by one.” These units are financed by the Mortgage Bank and some by the Socio-Urban Integration Fund (FISU), a fund transferred to the Ministry of Economy in April of this year.
On the other hand, the Government is reviewing the last “2,500 loans that were signed in November 2023, one month before the end of Alberto Fernándezs term.” According to official sources, each beneficiary was given the option of exchanging the mortgage loan for a personal loan. “70% have already accepted the proposal,” they added.
This plan is contemplated in Article 5 of the Basic Law, which establishes that the Executive Branch may “modify, transform, unify, dissolve or liquidate public trust funds” in compliance with the specific rules of each fund and the provisions of its constitutive regulations. |
