ROYAL DECREE LAW 6/2012, OF MARCH 9, 2012 ON URGENT MEASURES TO PROTECT LOW INCOME MORTGAGE DEBTORS
Royal Decree-Law 6/2012, of March 9, 2012, approving urgent measures to protect low income mortgage debtors (the “Royal Decree-Law”), was published in the Official State Gazette on March 10, 2012 and came into force on the following day.
The Royal Decree-Law was passed to protect a large number of households that, in the current drawn-out economic downturn, are unable meet their mortgage payments on their homes. Its provisions (i) define the persons falling into the group it aims to protect; (ii) establish the immediate moderation of late-payment interests applying to that group; (iii) set out a code of good practice, to which credit institutions may voluntarily accede, and aimed, firstly, to encourage the renegotiation of the loans of the referred group and, if this is not possible – and as replacement of foreclosure proceedings – the dation in payment of the home to the lender; (iv) set out specific tax measures to support those mechanisms; and, (v) lastly, relax the formalities for out-of-court foreclosure proceedings.
Consequently, the measures included in the Royal Decree-Law are confined to the mortgage loans held by the identified group, “without undermining the fundamental elements of mortgages, the security and reliability of which forms the historical basis for our mortgage system”, as expressed by the preamble to the Royal Decree-Law. The main effects of the Royal Decree-Law are summarized below in the form of questions and answers.