The new Code of Good Practices for mortgage debtors at risk of vulnerability of the Royal Dcree – Law 19/2022

Abstract

Royal Decree - Law 19/2022, of November 22 and the Agreement of the Council of Ministers of November 22, 2022 regulate a new Code of Good Practices for mortgage debtors at risk of vulnerability. The Code is of a transitory nature and its purpose is to prevent non-payment of mortgage loans granted before January 1, 2023 with a mortgage guarantee on the habitual residence of the debtor or the non-debtor mortgager, and whose acquisition cost does not exceed 300,000 euros. This is done through a novation of the mortgage loan based on extensions of the amortization term, reduction of the installments to be paid through lacks in the amortization of capital or conversion of variable interest rates to fixed interest rates. These are regulated novations, with the debtor being able to choose between the various alternatives established by the Code of Good Practices. The Code of Good Practices for mortgage debtors at risk of vulnerability is voluntarily adhered to by lenders, but once adhered to, it is mandatory to apply if requested by the debtor, provided that the contract and debtor eligibility requirements indicated in the Annex to the Agreement of the Council of Ministers of December 22, 2022 and in Royal Decree - Law 19/2022. In the event of assignment of the mortgage loan to a third party, if the assignor is an entity adhering to the Code of Good Practices, it assigns its creditor position with the obligation to apply the Code, so that the debtor could demand the novation of the mortgage loan from the assignee of the credit, provided that the request occurs during the temporary scope of application of the Code of Good Practices.