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Mortgages

Costa Luz Lawyers > Mortgages

The New Mortgage Act in Spain

When does the new Mortgage Act come into force? Not before May 2019   How is the distribution (bank-consumer) of mortgage expenses regulated?   The client will only pay the property valuation (between 300 and 600 euros) Valuators can be freely chosen by the client. They can be individual persons. Rest of the expenses will be paid by the bank (mortgage management, Stamp Duty Tax (IAJD), Notary and registration fees). Some entities have already begun to announce that they will also assume this expense in the new contracts. Saving on Stamp Duty is the most important one: depends on each autonomous community and can...

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Oppose the bank if you are sued for non-payment of your mortgage

Why is it easier now than ever? Different circumstances related to abusive clauses in Spanish Mortgage contracts and the revision of these by European Law, has created a never seen before scenario of protection for the mortgage holder. Some of these circumstances are: - Mortgages with early maturity clauses: The judges in virtually all of Spain have stopped the mortgage enforcement procedures pending the decision of the European Court on the possible nullity of the clause of early maturity. 2.-Sale of mortgage debt to investment funds: The Bank or the investment fund, depending on how the transfer was made and if this was...

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Free yourself from your burden as a guarantor in Spain

I volunteered as a guarantor of my son's mortgage loan (I am an avalista) and want to see if I can get rid of that burden. Can I stop being a guarantor? Yes, there are two arguments based on Consumer Law for you to argue against the bank for the nullity of the guarantee clause: One is the lack of transparency because with the endorsement clause, the waiving of the benefits of division and excussion are usually imposed with no explanation of the legal and economic significance of such benefits or no indication of joint and several liability. Another is the argument of the...

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Are Bankia and Banco Sabadell about to sell your mortgage?

If they are then there is evidence to suggest that you should oppose it. As a matter of fact many mortgage enforcement proceedings are paralysed in Spain at the moment until the European Court solves a matter brought to it by Spanish Supreme Court. Our experience tells us that, under this scenario, Banks are willing to settle in those cases when you give your property back to them in payment of the remaining mortgage debt. Do your calculations as it might be worth a try. Contact us for more information.  ...

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Possible nullity of multi-currency clause in a mortgage loan

The recent Supreme Court Sentence dated 26 November 2018, deals with the validity of the novation of a mortgage loan in which the parties modified the agreed currency, replacing the euro with the Swiss franc and converting the outstanding capital to be amortized from euros to Swiss francs. The analysis of the Supreme Court, inspired by important cases resolved by the CJEU such as the Andriciuc case or the Kásler and Káslerné Rábai cases and by the Supreme Court's previous decisions, centers its analysis on the contractual good faith required of financial entities. Bank´s Good Faith or “bonus argentarius” doctrine by Spain´s...

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Penalty interest for delay in mortgage or loan payments

Do not pay delay/penalty interest more than 2% above the agreed interest rate of the loan or mortgage If the penalty interest for payment delay of your loan (personal or mortgage) is more than 2% above the agreed interest rate of your loan or mortgage, the judge must maintain the rest of the clauses of the contract and cancel the clause relating to delay/penalty interest.  Nothing can be charged to the consumer if the rate is more than 2% above the agreed loan rate. Why 2 percentage points? The Supreme Court in Spain has considered 2% as the maximum which will not imply...

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Possibility of judicial declaration of nullity of foreclosure proceedings

Is it possible to obtain a judicial declaration of nullity of foreclosure proceedings when the request for payment to the defendant (mortgagor) has not been made with all the guarantees required by law, according to the interpretation made by the Spanish Constitutional Court? When a foreclosure proceeding is initiated in Spain, the mortgage debtor has very limited possibilities for opposition.  Hence the importance for the debtor to analyze in detail if the mortgage procedure complies with all procedural requirements. If the nullity of the mortgage process is approved by the Court, the consequences are that everything that has been done is not...

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Spanish Government announces law changes to force banks to pay mortgage tax

The Spanish Government has just passed a Decree by which mortgage lenders, rather than borrowers, will from November 12th, pay the Stamp Duty tax charged for the opening of the mortgage. The decree also ensures banks cannot deduct this cost on their tax returns. With this legislative decision, the executive government has over-ruled the Supreme Court’s recent decision which made the consumer pay the fee. The government justifies the fast decision due to the fact that the Supreme Court has created a big confusion: In mid-October the Supreme Court changed over 20 years of Case Law by ruling that banks, not borrowers,...

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Are agreements between the Bank and Consumer on Floor Clauses valid?

Very recently, on 15 June 2018, the Supreme Court issued a new ruling on a case relating to mortgage deeds novation modifying the floor clause through an agreement between the client and the financial institution. This judgment declares the nullity of the Floor Clause and the novation carried out subsequently through the signing of the agreement proposed by the bank to the client. What does the case decide? The case raises, as a matter of substance, the application of transparency control to a mortgage loan that included the so-called floor clause and that was subsequently the object of modifying novation. As stated in...

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European Union Commission on the IRPH clause in Mortgage Loans

The European Commission, in its observations to the Court of Justice of the European Union (CJEU), has positioned itself in favour of people affected by the mortgage index, IRPH, which directly opposes the judgment of the Supreme Court on the IRPH index in Spanish mortgages. This index, known as the ‘Index of Reference of Mortgage Loans’, (IRPH), affected 1.3 million mortgages. In those mortgages the interest rate was linked to the IRPH and not to the Euribor. IRPH is calculated by taking into account the loan interest rates offered by all financial entities and has always been much higher than the...

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