Spanish Banks - Illegal Mortgage Floor Limits

[supermac9]

We have a bank account and mortgage with Solbank/Banco Sabadell in Fuerteventura.
Having read a number of discussion threads on forums based on the island, it would appear that there has been a court decision recently in relation to floor limits (or 'cláusulas suelo') applied by many of the spanish banks to their mortgage products.
Very simply, most mortgages appear to be linked to the Euribor, which is currently very low, (our mortgage should be Euribor +0.8%) - however, many mortgages also have a floor limit, preventing it from going any lower, for example, than 3%. A recent decision in the spanish courts would suggest that floor limits are illegal, although Solbank are suggesting to me that they are still waiting for a final judgement (they may or may nor be).
The impression I get is that the spanish banks won't have to refund overpayments, but it's not clear if any of them are implementing the judgement.
I'm going to ask my local solicitor for a view - if anyone has similar experiences I would welcome comments.

[FlamingParrot]

Re: Spanish Banks - Illegal Mortgage Floor Limits

I was thinking of viewing some repossessed properties owned by Banco Sabadell which seem like a giveway and I came across some mention of that clause whilst googling. There are some groups around but they all seem to be in Spanish. There is a Facebook group: http://www.facebook.com/#!/pages/Eli...79037445445867 and this site: http://afectadosclausulasuelo.org/

You may have some luck with Google translation or the translation add-on for Firefox or Chrome. By the sounds of it, there are lots of people affected by this and the Spanish banks are raking in the ca$h: :rant:

The mortgage floor affects 29% of Spanish mortgages. The number of mortgages was 3,834,095 in 2008 and the profit made by the entities would be around 7,000 million euros.

[supermac9]

Re: Spanish Banks - Illegal Mortgage Floor Limits

I've asked our local solicitor for her views but I am getting silence at the moment - she may be concerned that I gave her power of attorney to sort the mortgage out for me while I was in the UK, so if there are any issues, it may rest with her.
There is a consumer group in Spain called Adicae who are championing the cause on behalf of customers, and I am aware of some people asking Adicae (or their lawyers) to take specific cases up for them, with some success.
I expect I will wait forever for my solicitor to get back to me on this, so I may try Adicae.
Will post updates.

[supermac9]

Re: Spanish Banks - Illegal Mortgage Floor Limits

An update on the position can be found in this link:
http://www.rdtabogados.co.uk/news/news.aspx
It's clear that the Spanish banks have nowhere to turn with this now, and it is just a matter of time before they all cave in and cancel these clauses. My own bank, Sabadell (Solbank) have repeatedly told me that they won't remove this clause from my mortgage, and that it was clearly there to see in my mortgage agreement - the fact that the Spanish Courts have repeatedly declared all such clauses illegal doesn't seem to be making an impression on them - in reality, they are just hanging on for as long as they can before being forced to do something about it, and while they do this, they continue to squeeze money from their mortgage customers.

[CleverClogs]

Re: Spanish Banks - Illegal Mortgage Floor Limits

In other words, a wunch of bankers is a wunch of bankers, regardless of where they might reside.

[Sickofbullies]

Re: Spanish Banks - Illegal Mortgage Floor Limits

Keep up the pressure they will cave in eventually.

[supermac9]

Re: Spanish Banks - Illegal Mortgage Floor Limits

Interestingly, after telling Solbank that I was going to report this to the Bank of Spain, they came back to with an offer to reduce the floor limit on our mortage. The offer is not backdated, so will only apply once we sign a modification agreement.
I still expect that a legal challenge some time this year will force Solbank to remove all floor limit clauses from their mortgage accounts, but in the meantime, this is a step in the right direction.

[Sickofbullies]

Re: Spanish Banks - Illegal Mortgage Floor Limits

Is it a substantial reduction?

[supermac9]

Re: Spanish Banks - Illegal Mortgage Floor Limits

It's a bit in the middle - our current floor is 3.8%, we are being offered 2.5%, and if it didn't exist at all, we would be paying around 1.4% (Euribor is very low at the moment).

[supermac9]

Re: Spanish Banks - Illegal Mortgage Floor Limits

After a abit of thought, we decided to accept Solbank's offer and go for the 2.5%.
However, when they received our signed form yesterday, their mortgage department promptly put my interest rate up to 4.5%, refunded my latest mortgage payment and charged me 54€ extra! I have asked them to sort this, but still cant understand where they got the 4.5% from, unless we have been conned by the Spanish small print!

All sorted after a couple of e-mails, funny that banks in Spain make mistakes too!
Saving me over 90€ a month, so cheers all round.