If the family home is foreclosed, there are particularities to be taken into account. For instance, there is a minimum adjudication price (we refer to this later in this article).
In addition, the default interest will not exceed 3 times the legal interest and will be only charged on the pending capital. Moreover, the legal cost will not exceed 5% of the total amount claimed in execution.
When the bank adjudicates an immovable and the adjudication price is lower than the debt, the amount exceeding the adjudication can be claimed up to cover the full debt. In the case of family home, the debtor will be released if within 5 years from the date of adjudication pays 65% of the pending amount (plus legal interests) or pay 80% within the next 10 years.
Another specialty is that, to foreclose, there should be 3 monthly installments outstanding (or equivalent amount).
The mortgagee can plea to Court arguing grounds of opposition, such as abusive clauses. Abusive are all clauses no individually negotiated whose incorporation is imposed by one of the parties (in this case, the bank).
As we said, in a foreclosing proceeding against a family home, is that in these cases there is a minimum price for adjudication, which will depend on the existence or not of bidders at the auction.
AUCTION WITH BIDDERS: If there are bidders, article 670 of Legal Proceedings Law says that, if the best bid is equal or more than 70% of the value assessed for execution, the auction will be approved in favour of the best bidder. If the bid is less than 70% of the said value, the debtor may introduce a third person, within 10 days, to improve the bid, offering an amount higher than 70% of valuation (or amount lower, providing that it covers the debt). After this period without improving the bid, the creditor will be able to ask for adjudication, within 5 days, for 70% of such value (or the amount overdue if higher than 60% of valuation price and the best bid).
If the mortgagor does not execute this right, the auction will be approved in favour of the best bidder, providing that the bid is higher than 50% of the valuation price (of lower if covers the debt interests and costs). We have to bear in mind that in all cases, before the auction or the adjudication, the debtor will be able to release his assets by paying the creditor the capital, interest and cost outstanding.
AUCTION WITHOUT BIDDERS: Article 671 of Civil Proceedings Law states that, if in the auction there are no bidders, the creditor (within 20 days) will be able to ask for adjudication of immovable (family home) for 70% or more than the value of the auction (if it is not family home the percentage is 50%). If the amount due is lower to this sum, it could be adjudicated for 60% of the said value.
Act soon. Do not give up plea to the Court and interpose all legal measures to minimize the foreclose effects. To try to do something few days before the auction date is a very difficult task (although in some cases the auction could be suspended). The measures should be prepared from the moment when you stop paying a mortgage instalment, because, sooner or later, the bank will foreclose. It is very important to know how to face a foreclosing proceeding.