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THE MORTGAGE ACT REFORM

NEW MORGAGE LAW

URGENT NEWSFLASH

SOME ASPECTS OF THE MORTGAGE ACT REFORM (Act 1/2013)

– It introduces increased protection measures for “habitual residences”, particularly where especially vulnerable groups and persons in risk of social exclusion are involved.
– The “habitual residence” status will have to be reflected in the new mortgage deeds.
– The maximum interest rate on mortgage loans or credit for the purchase of “habitual residences” may not exceed three times the legal interest rate and may only be accrued on the unpaid principal.
– Foreclosure of the mortgage may be executed through the courts or by auction before a Notary where so expressly agreed.
– An auction portal will be established for notarised mortgage foreclosures which will be managed by the State’s Official Gazette Agency.
– Where mortgage foreclosure is executed before a Notary, the latter shall inform the affected parties of any clauses they may deem unfair.
– Measures are thereby established to facilitate the independency of valuation companies in respect of credit and financing entities.
– The borrower’s handwritten acknowledgement that they have been warned of the possible risks arising from the contract will in some cases be required before entering into a mortgage loan contract.
– The Judge shall advise the parties of the existence of unfair clauses so that they can make any relevant statements before a decision is made.
– The court costs of mortgage foreclosure cases relating to habitual residences may not be in excess of 5% of the amount claimed.
– New rules are established for the foreclosure and auction of property, particularly where it relates to habitual residence.
– Urgent measures are established for the protection of mortgage debtors and guarantors without recourses (persons in risk of social exclusion).
– It regulates the “Code of Good Practice” for the entities which have adhered to it.
– The “Code of Good Practice for a Viable Restructuring of Mortgage-Secured Debts on Habitual Residences” is regulated in a schedule.

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