What happens if I stop paying my mortgage, as the president of Corinthians suggested?

Summary After Romeu Tuma Júnior suggested that Corinthians stop paying the Neo Química Arena debt, an expert highlights the legal consequences and alternatives for defaulting on real estate financing for the rest of the population.

The president of Corinthians' Deliberative Council, Romeu Tuma Júnior, caused controversy by suggesting that the São Paulo club should simply "stop paying" the debt with Caixa Econômica Federal for the Neo Química Arena , which already stands at R$710 million and has increased with interest since the stadium's inauguration in 2014. And does the common population also have this option when they take out a mortgage and cannot afford all the installments?

According to attorney Rony Mendes Santos, director of the law firm Mendes & Matias Advogados, it's important to understand that mortgage financing is a debt secured by the property itself. "Mortgage financing is nothing more than a debt assumed by the consumer with the bank for the purchase of a property, with the property itself as collateral for payment," he explains.

The consequences begin quickly, with "friendly" charges. But they can escalate into a notification from the property registry, requiring the consumer to pay the overdue installment and any remaining installments up to the payment date, as well as the standard interest, penalties, and other contractual charges within 15 days, or risk having the property auctioned off.

Although contracts stipulate that just one overdue installment will allow foreclosure, in practice, banks usually wait at least three overdue installments before beginning repossession, says the real estate law expert.

For those facing temporary difficulties, there's the option of renegotiating. Banks, out of generosity—that is, without any contractual or legal obligation—"allow their customers to extend payments for up to 120 days, which is a good way to balance the books in temporary situations," explains Mendes Santos.

In addition to direct negotiation, there are legal solutions. One is to request authorization to use the Severance Indemnity Fund (FGTS) to pay overdue installments. In more severe cases, when the contract cannot be maintained, the alternative may be to sell the property or transfer the financing to another party, avoiding the asset's auction.

If part of the mortgage has already been paid off before the loan is stopped, the lawyer clarifies that the consumer does not lose everything. "The law stipulates that the consumer has the right to receive a refund of the installments paid within five days of the property's auction sale. Therefore, the bank must pay the consumer the difference remaining after the entire debt under the mortgage agreement and the auction expenses have been paid off. Many consumers are unaware of this right and end up not seeking a refund," adds Mendes Santos.

The expert warns that most cases of default don't stem from a deliberate decision, but from external factors such as job loss or reduced income. Therefore, acting quickly is essential. "Most of the time, it's not a deliberate decision to default on the loan, but rather some external adversity, such as job loss, reduced income, and so on," he concludes.

With Corinthians' financial health in dire straits , the director advocated defaulting. "Stop paying for the stadium. Go pay the more urgent debts we have to avoid a blockade. Stop paying, that's it. It starts there," Tuma Júnior said at a press conference.

"We have to find a solution, we don't have the money," the manager stated bluntly about the crisis the team is going through.

Corinthians' debt with Caixa is adjusted annually based on the Interbank Deposit Certificate (CDI).

Stadium construction

The dream of Corinthians' own home began to take shape when the city of São Paulo was chosen to host the opening match of the 2014 World Cup. With political lobbying and logistical facilities, the black and white team's project to build a stadium on the land in Itaquera was approved by the Organizing Committee and FIFA.

Construction of the NeoQuímica Arena began in 2011. Initially, the project was budgeted at R$335 million. However, the estimated cost rose to R$858 million and then to R$1.2 billion. In 2013, the project received a significant financial boost through a R$400 million loan from the Brazilian Development Bank (BNDES).

The Interbank Deposit Certificate (CDI), still used today to adjust debt, was created by a specific law to make the stadium viable. At the time, Odebrecht, the construction company responsible for the stadium, purchased the vast majority of the CDIs.

Since its inauguration, Corinthians' home has always been a box office success, but revenues have never been enough to cover the installments of the debt with Caixa, which have grown every year with fines and interest.

One of Corinthians' biggest investments to pay for the stadium was the sale of naming rights. However, the club's management only secured a sponsorship in 2020, six years after the stadium opened. Hypera Pharma (a Neo Química brand) paid approximately R$300 million over 20 years.

In recent years, Corinthians has been trying to renegotiate its debt with Caixa Econômica Federal. Late last year, the Gaviões da Fiel fan club launched a virtual fundraiser to help with the debt.