Protecting mortgage debtors: fewer evictions, more options

Automatic summary, not yet reviewed

1. Evictions from primary homes of especially vulnerable groups are suspended for two years. This covers large families, families with children under three, people with disabilities or dependency, unemployed people who have used up their benefits, and victims of gender violencegender violence Violence a woman suffers from a current or former partner because she is a woman., if they meet income limits and other financial conditions.
2. Debtors must prove their situation before the Judge or the Notary with documents such as income certificates, pay slips, registration certificates and a signed statement.
3. Late payment interest on mortgages over primary homes is capped at three times the legal interest rate, capitalizing that interest is banned, and the out-of-court sale before a Notary is strengthened: the Notary can suspend it if an unfair clause is claimed. Appraisal companies must also be more independent from banks, and some mortgage loans require a handwritten warning from the customer about the risks.
4. When a primary home is repossessed, the debtor can be released from the debt by paying 65% of the remaining amount within five years, or 80% within ten, and can share in any future increase in the home's value if the creditor sells it. Bidding at auction is also made easier: the guarantee drops from 20% to 5% of the appraised value, and the deadline to pay the auction price is extended to forty days.
5. Royal Decree-Lawroyal decree-law A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses. 6/2012 is amended to broaden its scope, cap late payment interest at 2% on the outstanding debt, and improve the Code of Good Practices: debt restructuring (a five-year grace period, terms of up to 40 years, Euribor plus 0.25%), a principal write-down, and handing over the home in payment, which cancels the whole debt, with the option to stay two years as a tenant paying 3% of the debt per year.
6. The Government must push the financial sector to create a social housing fund offering affordable rents to people evicted for failing to pay their mortgage.

Who it affects

• Families at risk of exclusion with a mortgage on their primary home: They cannot be evicted for two years if they meet the vulnerability and income requirements.
• Mortgage debtors with no resources: They can request debt restructuring, a write-down, or handing over the home in payment if their bank has signed up to the Code of Good Practices.
• Guarantors and non-debtor mortgagors: They can demand that the main debtor's assets be used up first before the debt is claimed from them.
• Credit institutions: They must cap late payment interest, accept customer-provided approved appraisals, and follow the Code of Good Practices if they sign up to it.
• Appraisal companies: They must strengthen their independence from banks and undergo account audits.

Words worth knowing

Lanzamiento (eviction)

Removal of the occupants from a home by court or notarial order after a mortgage foreclosure.

Intereses de demora (late payment interest)

Extra money owed for paying a debt late.

Dación en pago (deed in lieu of payment)

Handing the home over to the bank in exchange for cancelling the entire debt.

Quita (write-down)

A reduction of part of the money owed.

Indicador Público de Renta de Efectos Múltiples (IPREM)

A public index used in Spain as a reference to measure income and set limits for aid.

gender violence

Violence a woman suffers from a current or former partner because she is a woman.

royal decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries