The Royal Decree-law determines a Code of Good Practice to ease the situation of destitute mortgagers through the following measures: (i) restructuring the debt by establishing an exclusion period with regard to the capital amortization and a decrease of interests for four years, as well as the extension of the overall amortization period; (ii) in case that the restructuring should not succeed, a haircut of the total debt can be approved; (iii) as a last measure, the realty can be handed over in accord and satisfaction as complete amortization of the total debt while allowing the mortgager to stay in the realty as a tenant paying an affordable rent for a period of two additional years.
However, these measures only apply to mortgagers that fulfill certain requirements. Amongst others they may not have any income from work or other economical activities.
Furthermore, banks are not legally obliged to make use of the Code of Good Practice. But once a bank agrees to apply the Code it will be bound for a period of two years at least. Notwithstanding, the Code only applies if the purchase price of the realty – financed by loan and guaranteed with a mortgage – does not exceed certain maximum amounts (between 120.000 and 200.000 euro).
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