This week has seen unprecedented Supreme Court action that has unleashed all kinds of mayhem on an internal level, not to mention the consequences this has had on the financial sector. Over the past few years we have seen thousands of court cases revolving around the financial sector and their methods when it comes to granting mortgages. The primary issue was in relation to the infamous Floor Clause inserted in mortgage agreements (in many cases without advising the mortgage holder!) but a Supreme Court ruling in favour of mortgage holders obligated banks to reimburse any benefits obtained which could be a few thousand euros per case. The secondary issue and the one this article referrs to has to do with reclaiming the Stamp Duty paid on the Mortgage Deed.
Scenario: You go on holiday and enjoy seven fun-filled days with your family and return home with the usual feelings of renewed interest in life mixed with dread as you know you have to go back to work the following day. You open the front door and begin to wheel your suitcase in but to your surprise, somebody else is now living in YOUR home! Congratulations, you now have an Okupa!
Despite the deep hole Spanish banks have dug themselves over murky mortgage laws which has culminated in the refund of all monies property owners have grossly overpaid during the life of their mortgages, they are in deep water again with the European Commission (EC) for non-fulfillment of their obligations.
Along with Portugal, Croatia and Cyprus, on the 27th April 2017, the EC has decided to bring Spain before the Court of Justice of the European Union (CJEU) for non compliance of the agreement to incorporate EU mortgage legislation into their own.
These countries had until the 21st March 2016 to include EU directives into their national laws but they have failed to do so and as a result they have defied regulations that would create a unified mortgage credit market across Europe with consumer protection high on the list of objectives to achieve.
If you bear in mind that Spain had to be “rescued” financially by Europe to resolve the chaos that ensued after the fall in the property market, it is incredible they would once again defy EU rulings in this matter. Even though the Spanish government declares the required text is being prepared, it has now been two years since formal proceedings began but they have yet to even produce a draft copy of new measures to be enforced or even a specific time-frame as to when this document may be available. They also state the reason for the delay is that Spain did not have a working government throughout 2016 so this matter could not be advanced further. Now it rests in the hands of the Court to evaluated the situation and take any action they deem necessary.
Why issue does the EC have in the way Spain handles mortgage constitutions? Basically the total lack of transparency as many were not duly advised of the now famous floor clause meaning they would not benefit if the interest rate fell before the rate stated in their individual contract. This in itself goes agains consumer rights and principles based on legislation approved back in 1993. Take on board also dubious evictions and there is a serious case against the Spanish Economic Ministry.
In other news, BBVA has finally begun to refund their clients all overpayments incurred because of the floor clause FOUR years after the Supreme Court deemed their contracts null and void and even after they declared last December they must return these monies. Despite these rulings against their practices, BBVA resisted and delayed as much as they could until finally they have been forced to comply. In the latter half of April, they began to advise and pay their customers what they are owed.
To this date, I have received information showing that some banks still include some form of floor clause in newly formalized contracts but it is detailed or “disguised” differently. Be aware of these practices and contract legal advise if you are unsure whether your mortgage includes a floor clause or not.
Stay tuned to this blog as I will be announcing news shortly about reclaiming YOUR bank for any monies you may be entitled to as a consumer.
The Spanish Supreme Court has ruled in favour of OCU (Consumer Organization) by manifesting that Banco Popular’s floor clause to be null and void. This is another battle OCU has won against one of Spain’s leading banks following up from sentences in 2013 that ruled against BBVA, Abanca and Cajamar.
If you have been following this particular issue that is rampant in Spanish banks, you would know that during the property boom, limits were placed within clauses of mortgage loans to stipulate a minimum interest rate throughout the life of the mortgage. This means that if the interest rate were to fall below the stipulated minimum or floor clause, the holder would not benefit because the bank would charge the “agreed” floor clause. I say “agreed” simply because most holders were not properly advised of the existence or the meaning of this clause in their contracts.
Spanish banks find themselves yet again in the limelight of another scandal. The Supreme Court has given them until 31st July 2013 to review the floor clauses in their mortgage loan contracts to evaluate whether or not they comply with transparency requirements. If the outcome is negative, the clause must be eliminated altogether.
