Restructuring of mortgage loans

The TS declares that, fulfilling all the requirements demanded by the Code of Good Practices and having adhered to the banking entity, it is obliged to attend the requested restructuring.

The Chamber estimates the appeal filed by the debtors thereby recognizing the right to have their mortgage loan restructured, by meeting all the requirements required by the Code of Good Practice.

Being undisputed in this case that the defendant bank was voluntarily adhered to the Code of Good Practices at the time the debt restructuring proposal was submitted; that the mortgage loan that the appellants had with her was within the scope of the Code; and that those were in the exclusion threshold foreseen in art. 3 RDL 6/2012.

The voluntary adhesion of the credit institution to the Code of Good Practice implies its subjection to this system. This gives rise to the right of borrowers who meet the requirements required by the Law, to urge the credit institution to restructure prior to the foreclosure and, where appropriate, the complementary ones -quita- or substitutes for the execution -dation in payment-.

The Supreme Court, which estimates the debtors’ recourse, declares that the bank breached the legal duty to meet this request, considering the two reasons on which the rejection was founded:

• That all due and unpaid installments must be paid beforehand.

For the Supreme Court, although the mere restructuring does not entail the cancellation of the overdue and unpaid installments until that moment, its previous payment does not constitute in the Law a budget for the concession of the restructuring whose noncompliance justifies the rejection of the request . The way these overdue and unpaid installments must be paid is part of the plan that the bank must offer.

• That the embargoes that were locked after the constitution of the mortgage must be raised.

The TS also rejects this argument because the restructuring plan does not alter the registration rank of the mortgage. In order to preserve its guarantee, the credit institution does not have to demand the lifting of the seizures.

The Court adds that the adherence of credit institutions to the Code also implies that if the bank disregards a request for debt restructuring for causes not legally justified, it may be sued by the borrower to be sentenced to grant this restructuring.

Once the judicial action has been exercised on time, the subsequent foreclosure does not prevent the judicial proceeding from continuing, without prejudice to the fact that, in the case of an estimate of the demand, given the impossibility of complying with the nature of the conviction of carrying out the restructuring of the debt claimed-, it is necessary to opt for compliance by equivalence, that is, the compensation for the damages suffered.