Published on: Dec 27, 2014 @ 15:57
Hundreds of thousands of homeowners who bought in the height of the last boom, are now finding that they have negative equity in their homes. Many are finding it impossible to meet the monthly mortgage payments. For these people it is not a question of blame for signing mortgage contracts of which the repayments, they would not be able to meet in the future.
During the house purchase frenzy period, banks were encouraging buyers to take out loans with no questions asked. The interest rates charged were about to reach unprecedented levels in the following years. One expects the rate to fluctuate but not to foresee the destructive elements caused by many of the banks unethical behaviour in adding abusive clauses to many mortgages. It can be no accident or coincidence that the particular abusive ‘floor clause’ was written into loan contracts by numerous banks. When faced with the reality, it has to be accepted that the banks in question knew exactly what they were doing.
Is it immoral that within a monetary banking system with market discipline and regulations by the bank of Spain could have acted against the rules, not allowing those who would be making repayments on their loans, (with very attractive profits to the banks) to enjoy the benefits from the rate change?
We all know that interest rates fluctuate, paying the increases when these rose. The reality is that most mortgage holders have not for many years, been able to benefit from the fall in interest rates, during the last six to seven years.
Eventually the rates reached an all time low, somewhere in the region of Euribor plus 0.5 percent, whilst most homeowners were and are still paying anything from 3 to 5%. So simply the banks increased the rates payable in line with the markets but did not decrease these when rates took a dive. Looking at the huge differences in the APR paid, it does not take long to figure out how this resulted in excessive monthly repayments.
To shed some light on the profits made by the banks by using this illegal method of collecting money, one can take into account that one bank alone BBVA, (who removed the clausula suelo ‘floor clause’ from their mortgages once inundated with litigation) were to lose 33,000,000 euros each month just in repayments to their mortgage holders. The proof of the amount in excess that they were charging their borrowers. With the banks earning extraordinary high profits like these, it is no wonder that many other top banks are refusing to remove the clause unless their clients embark on litigation.
Many mortgage holders, once aware of the clause have spoken with the directors at their branch asking for the clause to be removed and secondly, to have the extra payments they had made monthly over many years refunded. Most banks will give many reasons why they will not comply and why you are not entitled to claim. With cases being won against the banks all over Spain, you would wonder as to why the banks do not oblige to the requests made by their clients. The answer is quite simple. With the substantial amounts the banks will have to repay, it is beneficial for them to play a waiting game. Out of twenty mortgage holders who complain only one will embark on litigation. Perfect for the banks, they will only have the expense from the claim from one client out of twenty. Take into consideration that since the news of the clausula suelo started to circulate, only 5% of mortgage holders with this clause have made a legal claim against their banks.
Have we allowed the banks too much power? Have we trusted that by signing a mortgage contract at the notary that we would have been made aware beforehand of the implications of what we were to sign? The citizens appear to have an inbuilt and unquestioning attitude to banks, holding them in high esteem and as an incorruptible entity for many year. Will we start to question the banks who have led clients to believe that a life insurance mortgage PPI and other insurances were a requisite of obtaining a mortgage, banks who have refused many the legal right to cancel contents insurances, who have been charging illegal commission, who have misled their clients into putting their funds into long term investments, when most of these who were pensioners were led to believe they could have access to their money? The list is endless. Should those who allow the banks to make huge profits, now take control of the way their finances are controlled and ask that funds illegally taken from them are returned?
Important update: 13/03/2016
We now have lawyers willing to take on your cases in any region of Spain and the Islands. For further information, contact the email below.
IMPORTANT UPDATE. 07/03/2015.
A BLACK WEEK FOR THE CONSUMER.
The supreme court last week has ratified a ruling made in May 2013 accepting the illegality of the clausula suelo in mortgage contracts. This is to avoid more claims against the banks.
The banks will now have to remove the clause and only to avoid having to refund thousands of euros to their mortgage holders, who have been paying extortionate monthly rates since at least 2008, the money owed. Some mortgagees who did not unwittingly sign acceptance of the clause, will now only be reimbursed for monies paid since May 2013 and this only if the bank agrees that the mortgagee had no knowledge of the clause (signing the mortgage deeds may be now considered as compliance with the abusive clause)
CAB Spain avoids printing opinions but in this case, I personally have to say that I find this to be an immoral action by the government, in an endeavour to protect the banks from returning millions to almost four million mortgage holders, these families who have paid in excess of the market interest rate, for many years.
Your bank may contact you. Beware of what you sign. You may be closing the door to any future claims. For those affected, please link on the article to pose your question enabling us to keep you updated.
Update The European commission has said that the banks should refund clients retroactively. We are now waiting for a decision on this from the European Court of Justice. Will they rule in favour of the consumer? Some banks who are hurriedly trying to come to an agreement with their mortgage holders seem to think so.
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