CW 953 Front THOUSANDS of British home-owners in Tenerife could be entitled to huge refunds from their banks, which have been over-charging mortgage interest for years.

The banks’ method is not illegal. Yet! But it could be deemed so on 12th July, when the European Court of Justice (ECJ) convenes to make its preliminary conclusions on the controversial Clausula Suelo (floor clause) mortgage – a collaborative scheme involving several banks, which blocks interest rates from falling below a certain price.

At the moment, the affected banks have been ordered to repay the excessive sums (plus interest) made by home-owners for a period of exactly three years, dating back to the Supreme Court’s initial judgement of 9th May 2013.

It meant that the retroactive limit was fixed on that date and could not be extended further back. But many mortgage holders and legal experts thought that line in the sand was wrong. They argued that the reclaim should go back further. And their thinking has been mirrored in the law courts.

The ECJ will already be aware that a judge, sitting in the Oviedo Court, in the autonomous region of Asturias, ruled on a particular mortgage that if the Clausula Suelo has been “declared void, it is null from the very beginning and cannot be limited in time”.

The same decision was taken last April by Santander’s Mercantile Court 1, forcing Banco Popular to refund 2,707 euros to one house-holder from September 2009 (not from May 2013).

In any case, it seems that the ECJ will take into account the European Commission report, stating that there should be full retro-activity.

The EC report adds: “It is not possible for domestic Courts to moderate the devolution of sums paid by the customer, due to the application of a clause that has been declared null and void from the origin, due to the lack of information and transparency.”

The 40-plus banks involved are wriggling every which way to save their skins, because millions upon millions of euros, literally, will be lost immediately – and in future returns – if the ECJ rules against them.

If you are uncertain about which type of mortgage you have – one based solely on the Euribor (the official European bank rate), Fixed, Variable or Clausula Suelo, just ask your bank for clarification.

Banks should charge, as standard, between 0.75% and 1% above the Euribor interest rate. Banco Sabadell charge Euribor plus 1%, while Banco Santander’s rate is Euribor plus 1.49%.

The key to a claim is the controversial Clausula Suelo mortgage. If you have already been contacted by your bank, offering an enticingly-low, fixed-rate interest on your mortgage, that tells everything, so beware! It means you hold Clausula Suelo version, and the bank, trying to wriggle out of coughing up all the extra euros you’ve already paid since signing the mortgage contract, wants you to sign a disclaimer.

Myra Cecilia, who represents the Citizens Advice Bureau, Spain, said: “We know that a certain bank is now contacting its home-owner clients and offering to remove the clause if they sign for a fixed-rate mortgage – and sign away their rights to make claims for repayments of the excess they’ve already paid.

“With the Euribor at lower than zero, the bank is offering a fixed rate at, wait for it; 2.150%, when, in reality, the Euribor rate for this month will, on average, be  minus 0.32%.

“The bank has provided clients with a Euribor forecast for the next 12 months, and its chart, conveniently, shows it 2% for May.”

She was backed up by a Canarian Weekly reader, who told us this week of her surprise at receiving a phone call in April from her bank manager – they’ve never even met – offering a near-2%, fixed-rate drop in her mortgage, saving all of 25 euros a month!

His call was followed up, almost immediately, by an email spelling out the deal in full, and saying this bargain offer was valid until the end of the month only – and that there was no need for her to attend the notary office.

This alerted our reader immediately and, when she mentioned it to a neighbour, he said he’d heard of the Clausula Suelo. Needless to say, she has not been in touch with the bank since.

Although the application of this clause is still lawful, it has been deemed “unfair” and “abusive” in most cases.

A Madrid judge certainly thought so last week after ruling in favour of 15,000 house-holders with these controversial mortgages, but with bank repayments from May 2013 only.

Whatever the Supreme Court outcome, as many as four million people in Spain could be affected – and who knows how many in Tenerife – despite the benchmark Euribor interest-rate hitting historic lows.

As has been reported in the Canarian Weekly this year, it has been in negative figures for the last three months.

Ms Cecilia added: “The majority of those affected, who do not sign a bank’s disclaimer agreement, will be guaranteed the removal of the clause and a full refund, if the Supreme Court agrees with the Oviedo verdict.

“And even if they do sign a disclaimer, lawyers with expertise in this field say that even if a letter of agreement has been signed with the bank for the fixed rate and/or giving up your right to claim, this would more than likely be considered null and void by the courts.

She added: “You have the option to litigate, anyway, using these expert lawyers, who have already enjoyed a 99% success rate.

“I have been tracking the abusive floor clause since around 2007 with a law firm I collaborated with before the setting-up of CAB Spain.

“We have had many successes in removing the clause and seeing the mortgage-holders reimbursed.

“And we are now awaiting the European Justice Courts to rule on the side of the consumers, thus giving them the right to claim the extra paid on their monthly repayments from the start of their contract.”

In the latest of her regular online financial blogs, Ms Cecilia writes: “More than 40 Spanish banks added this “floor clause” into their mortgage contracts several years ago, stipulating that interest rates would not fall below a certain percentage, instead of following the Euribor-plus interest.

“This clause was eventually deemed as ‘abusive’ by the courts in Spain, but only after the European courts ruled against this malpractice.

“It should have meant that all mortgage-holders who had this Clausula Suelo in their contracts, would have it removed, and a return the overpayments they made during many years because of the clause. But this was not to be the case, with the banks holding fast.

“One bank alone, from doing the right thing by the consumer, would have lost over 33 million euros a month!”

Canarian Weekly lawyer Mariano Zunino, who has been tracking this astonishing story from the start, and has dealt successfully with many judicial cases involving “abusive clauses”, says: “It is all about this ruling from the European Court.

“The decision will affect, firstly, those processes still pending, as the European Court judgement will be binding for domestic judges, who will then rule according to the decision.

“Secondly, it will be necessary to reconsider the cases with ‘final judgements’ and, I understand, they could be subject to a ‘revision appeal’.

“As a matter of fact, in April 2016, the Supreme Court decided to suspend the proceeding of an appeal enacted by a bank regarding the ‘floor clause’ until the European Court’s final verdict.”

The lawyer added: “We have to wait until the ECJ decision, of course, and how it will hit the Spanish banks, who could be forced to refund up to 7.6 billion euros.”



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Posted by on May 13 2016. Filed under Local News, Home Page Featured. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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