Notes on the extraordinary regime of protection of housing loan borrowers

Law n. º 57/2012 of November 9 created a regime for the protection of debtors outstanding housing credit, which applies:

– The situations of non-compliance with loan agreements concluded within the system of granting mortgage loans for the acquisition, construction or carrying out maintenance works and upgrading of permanent housing;

– In cases where households are in a very difficult economic situation; – When the subject property is a single dwelling household;

– Has been the subject of a loan agreement with a mortgage;

This law is mandatory for lenders credit institutions, where they satisfy all the following requirements:

1) The housing credit is secured by a mortgage covering property that is about to permanent housing and single dwelling household of the borrower and for which it was granted;

2) The household of the borrower is in a very difficult economic situation: For example: – At least one of the borrowers is in unemployed or the household has suffered a reduction in gross annual income equal to or greater than 35%;

3) The taxable value of the property does not exceed: – € 90,000.00 (Ninety Thousand Euros) in cases where the mortgaged property has location coefficient to 1.4, – € 105,000.00 (Five hundred thousand Euros) in Where the mortgaged property has location coefficient between 1.5 and 2.4, – € 120,000.00 (One hundred r Twenty Thousand Euros) in cases where the mortgaged property has location coefficient between 2.5 and 3.5 ;

4) Mortgage loans are not secured by collateral or other personal: – except in the case of a personal guarantee, the guarantors are also in very difficult economic situation;

However, if not met one or more of the above requirements, credit institutions may voluntarily decide to apply all or part of the regime in the present law to other borrowers of mortgage loans by submitting a request by the borrower to the institution credit who has signed the loan agreement.

These are the main rights for the Bank clients:

Upon notification Bank cannot file for a lawsuit against the client.

If there is an ongoing judicial process this procedure determines the immediate suspension of the lawsuit

A credit institution is not required to propose a restructuring plan when it considers that its implementation is not feasible. A credit institution may agree with the customer banking application of complementary measures.

There may also be room for the application of measures alternatives to foreclosure, such as accord and satisfaction of the mortgaged property, the sale of the property to a real estate investment fund for Rental Housing (FIIAH) or exchange the property for a dwelling of less .