PROTECTION OF MORTGAGE DEBTORS

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Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage holders out of resources.

Object.

- Establish measures to ensure the restructuring of mortgage debt of those with special difficulties in meeting its payment;
- Relax the foreclosure proceedings.

To whom it applies:

- As a general rule, debtors located on the threshold of exclusion loan or credit agreements secured by real estate mortgage
- Will be generally applicable measures contained in Articles 12 (extrajudicial execution procedure) and 13 (preference for access to aid for tenants).

Threshold. Shall be considered located at the threshold of exclusion those debtors of credit or loan secured by mortgage on your primary residence, when they concur in all of the following:

- Must be the only house owned by the debtor
- Loan / credit granted for purchase without collateral or inadequate personal
- All members of the household must have no earned income or economic activities;
- Higher mortgage payment to 60 per 100 in net income of the household;
- Members of the family unit must lack of assets to meet debt and Mode accreditation requirements. It develops in the art. 3

Moderation of default interest. From the time that the debtor prove that is located on the threshold of exclusion, the applicable penalty interest shall not exceed the result of adding a remunerative interest on the loan agreed a 2.5 per cent on capital outstanding loan. This measure applies, though the financial institution has not signed the Code of Good Practice, as Article 4 that includes the regulation is independent of the Code.

Code of Practice.

Features:

- May voluntarily subscribe to credit institutions or any other entity, professionally, carries out the loans or mortgages;
- Published as an annex to RDL;
- Once signed, compliance is mandatory;
- Either party may compel the other to grant deed of novation of the contract, applying the provisions contained in the Code of Good Practice, with the costs borne by the applicant, the innovation will have the effects specified in Article 4.3 of the Law 2/1994, (no change in range of the mortgage, except increased responsibility or term);
- May be invoked before the courts by the affected party;
- Stay in the Code shall be for a minimum of two years, automatically renewable from year to year;
- The acquisition value of the home being financed must be less than the following limits:
- Cities of more than one million people: 200,000€.
- Over 500,000 or in metropolitan areas of over a million: 180,000€
- Over 100,000 people: 150,000€.
- Other: 120,000€.
- Will be applicable only to the member institutions, debtors and contracts referred to this Royal Decree, not walking its length, as a matter of policy or interpretation, to any other area, although, of course, the member institutions may matter purely discretionary implement the provisions of the Code of Practice to debtors or improve various provisions contained therein.

Procedure:
- Financial institutions should communicate their inclusion in the General Secretariat of Treasury and Finance, who shall publish the quarterly list in Electronic Office and the BOE.
- Monitoring will be conducted by a Commission of Control which is a representation of the Spanish Mortgage Association, the Bank of Spain, the National Stock Exchange and the Ministry of Economy who will chair the committee and have a casting vote .
- The Control Commission shall publish a yearly report on their compliance.
- May be introduced to the Bank of Spain claims arising out of any alleged failure by the banks of the Code of Good Practice, which will receive the same treatment as other claims processing and resolution which corresponds to said Bank of Spain.

Misapplication. The debtor would have benefited both the reduced penalty interest as the provisions of the Code of Practice without qualifying for it, or who willfully and deliberately, seek placed or kept on the threshold, will affect at least the following consequences:

- Be liable for damages that may have occurred for an amount not less than the benefit improperly obtained;
- Pay all costs arising from the implementation of these measures of flexibility.

Fiscal

- ITPYAJD. A new article 45.IB number 23) of the revised text:
"23. The writings of formalization of contractual innovations and mortgage lending to occur pursuant to Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage borrowers without resources, shall be exempt from the quota phase- the notarial stamp mode of this tax. "
- Increase in Value of Urban Land. A new paragraph 3 to Article 106 of the Act Regulating Local Tax:
"3. In transfers made by debtors within the scope of Article 2 of Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage holders out of resources, on the occasion of the payment in your housing provided for in paragraph 3 of Annex of that rule will be considered a substitute for the taxpayer taxable entity acquires the property without the substitute may require the taxpayer the amount of tax obligations met. "
- Income tax. It adds an additional provision to Law 35/2006 of 28 November:
"Thirty-Sixth additional provision. Foreclosed housing. Shall be exempt from this tax the capital gains that could be generated in the debtors within the scope of Article 2 of Royal Decree Law 6/2012 of 9 March, on urgent measures to protect mortgage borrowers without resources, occasion of the payment in your home under paragraph 3 of Annex of this standard. "

Tariffs. The notary and registration duties arising from the cancellation of real rights in cases of mortgage foreclosed mortgaged debtor located in the threshold for exclusion of this Royal Decree-law, give a bonus by 50 percent. The debtor shall not bear any additional cost of the financial institution that purchases mortgage free of charge, ownership of the property mortgaged before.

Extrajudicial execution procedure. This reform is of general application and not only to debtors included in the threshold of exclusion, but only affects cases where the procedure taken against a debtor's residence:

1. The realization of the value of the property will take place through a single auction for that type will be that agreed in the memorandum of mortgage. However, if you submit a bid for an amount not less than 70 percent of the amount by which the good would come to auction, means the property awarded to whoever presents the best position.
2. When submitted the highest bid is less than 70 percent of the type referred to the auction, the debtor may file, within ten days, the third to improve posture, offering more than the 70 percent of the appraised value or, even less than this amount is sufficient to achieve complete satisfaction of the right of the performer.
3. After the said period expires without the debtor of good conduct as provided in the preceding paragraph, the creditor may, within a period of five days, the award of the property or properties for an amount not less than 60 percent of the appraised value .
4. If the creditor not to make use of that authority, means the property awarded to who has submitted the highest bid, provided that the amount you have offered over 50 percent of the appraised value or, still less, cover at least the amount claimed for all items.
5. If the act of the auction no bidder has not, the creditor may, within twenty days, request the award in the amount not less than 60 percent of the appraised value.
6. If the creditor fails to make use of the option referred to above, shall be governed by the provisions of Article 236 n. Regulation of Mortgage (if there should remain deserted auctions held and the creditor fails to do the right goods procured executed, the Notary will terminate execution and close and formally registered the minutes, which opened to the courts that apply).

The reform is to adapt this procedure a set of rules (Articles 234 et seq of the Mortgage Regulations, which refers to art. 129 LH) to the reforms of the Civil Procedure Act that affected their Article 670, 671 and later additions Sixth Additional Provision.

Now, the possibility of three auctions now limited to cases where the property is not the debtor's residence.

But even after this reform, it awards for bids to cover the amount claimed, but this was ridiculous (paragraph 4), also by the creditor, if he acted as a bidder.