Spanish Banks In-undated With Mortgage Floor Clause Claims and Fee Refunds

13th June 2017

Investors in Spanish property who took out a mortgage may be due a refund on set-up fees and floor clauses.

The Spanish courts have ruled that it is illegal for banks to charge clients loan setup fees, which should be covered by the banks themselves.

In addition, it has now been deemed illegal for ‘floor clauses’ to be included. These floor clauses imposed a minimum interest rate on floating-rate mortgages by setting a limit on how far mortgage rates can fall. In meant that Spanish mortgage buyers did not profit fully from the record-low interest rate environment in recent years and that these provisions were put in place entirely to protect a bank’s profits.

The European Court of Justice has now ordered lenders to hand back all the money to their clients that was made on “unfair” mortgage floor clauses.

Banks will have to make provisions to pay back the money owed to its customers and it has been reported this could reach in excess of €5bn.

The ruling has exposed banks such as BBVA, Banco Sabadell, Caixabank, Banco Popular, and Liberbank to claims that could run into billions of euros.

Banco Santander, Spain’s biggest bank by market value, is not affected by the ruling because it never used floor clauses.

It is understood the Spanish courts are now under immense pressure and on the verge of collapse after being inundated with claims relating to mortgage floor clauses, amongst other mortgage claims.

It means that successful claimants may have a longer wait to get their money back but at least the wheels have been set in motion.

Claim forms are available via the banks and an understanding of Spanish and the Spanish legal system would be helpful to ensure they are completed properly ensure the money owed to the claimant is retrieved.

Tony Freeman
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