The Code of Good Practice for the viable restructuring of mortgage debts following Law 25/2015 on the second-chance mechanism

Abstract

Royal Decree-law 6/2012 of 9 March on urgent measures for the protection of insolvent mortgagors, has been reformed. First, by Law 1/2013 of 14 May on measures to strengthen the protection of mortgagors, the restructuring of debt, and social housing, and then by Law 25/2015 of 28 July on the secondchance mechanism, the reduction of the financial burden, and other measures of a social nature, resulting from Royal Decree-law 1/2015 of 27 February. This article examines the reforms introduced into Royal Decree-law 6/2012 by these provisions, both with regard to its scope of application and the measures for the restructuring of mortgage debt (application of the Code of Good Practice and moderation of default interest). In relation to this last matter, consideration is given to the recent pronouncements of the Supreme Court on the objective principle for determining whether or not default interest is unfair, as well as on the consequences of any such unfairness, in so far as this may affect the application of the measure for the moderation of default interest imposed on mortgagors who are on the threshold of social exclusion. The author also considers recent pronouncements in the caselaw of lower courts concerning the application of this Royal Decree-law.