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 Daily news from the Canaries and the islands' biggest English language newspaper on-line
Daily news from the Canaries and the islands
   Daily news from the Canaries and the islands' biggest English language newspaper on-line

Mortgage arrears
Court backlash
Spanish courts are becoming increasingly intolerant of what they seem to see as greedy bank charges on mortgage holders in trouble.

06.04.2014 - The latest case was heard in Cantabria, where a judge in Torrelavega declared null and void a mortgage clause which fixed a late payment charge of 19 per cent on the unlucky debtor, three times the client’s normal interest rate.

The defending bank this time was the BBVA, already reeling from the loss of their low interest capping last year.  Along with many other institutions they seemed to find it ok to increase the interest as much as they wanted when rates rose, but had fixed a level below which it wouldn’t drop – the courts took a different point of view.

In this case, the court took the view that BBVA’s interpretation of the European legislation against evictions was “perverse” and declared the clause in question “abusive” and therefore illegal, null and void according to the Ley de Consumidores y Usuarios.

In the summing up, the judge added that although the clause was agreed to when the mortgage was first signed, subsequent legislation set a legal limit on the charges that could be made and therefore overrode the previous agreement, thus cancelling out the “abusive” clause. 

Finding for the borrowers and saying that they had completed their contractual obligations, the judge underlined the ruling by underlining that the clause was, “clearly out of line with the terms laid down by the Justice Tribunal of the European Union” and that, “the punishment for the abuser has a clear and just reason: To stop them using their dominant situation to make contractual clauses which impose an abusive interest on the consumer … and to dissuade them from behaving like that again in the future”.

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