The banking regulation Q&A series provides a comprehensive overview of the rules governing the banking sector in Luxembourg. Today's chapter focuses on recovery, resolution and liquidation.

What options are available where banks are failing in your jurisdiction?

A mortgage bank has the power to foreclose and sell the collateral if the debtor is in default. However, this power does not apply in full. There is a risk of abuse of power in this respect. The circumstances, motives and actions of the parties play a major role in this. In this situation, the interests of the mortgage bank and the debtor are diametrically opposed. The mortgage bank has an interest in claiming the outstanding claim and the debtor has an interest in maintaining his immovable property.