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13 November 2009
Legislative Decree 192/2009 was published in the Official Gazette on August 17 2009, amending Legislative Decree 51/2007, which governs banking practices in relation to mortgages.
The amending decree extends the provisions on banking practices to other loan agreements guaranteed by the same property, reinforcing consumer rights to information and extending the legal framework for mortgage agreements as set out in Legislative Decree 171/2008.
The legal framework governing banking practices for the granting and renegotiation of mortgages - which covers interest calculation, early repayment, associated sales and duties of information and disclosure - now applies to other loans secured by the same property. In light of the common banking practice of negotiating a reduction in the spread of mortgages in exchange for the acquisition of other financial products, the revised framework now requires the bank to inform the consumer of the reviewed effective annual rate so that the consumer can compare the costs and benefits of the options on offer. Many consumers have found themselves faced with an increased spread as a result of failing to comply with the conditions of their contract. Therefore, the legislative decree states that the right to demand compliance with such conditions must be exercised within one year of non-compliance, after which it will expire.
For further information on this topic please contact Manuel Magalhães or Francisco Mendes Correia at Cuatrecasas Gonçalves Pereira by telephone (+351 21 355 3800), fax (+351 21 353 2362) or email (firstname.lastname@example.org or email@example.com).
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Francisco Mendes Correia