“I SIGNED A MULTI-CURRENCY MORTGAGE AND NOW I KNOW I WAS SWINDLED”.

“BECAUSE OF THE MULTI-CURRENCY MORTGAGE, I HAVE NOT BEEN ABLE TO RETIRE”.

“I NEVER REALLY KNEW WHAT I WAS SIGNING”.

These are real testimonies of those who chose to take out a multi-currency mortgage: now the courts consider that this financial product IS NOT TRANSPARENT. A ruling that could change the future of more than 70,000 families in Spain.

PARTIAL NULLITY OF MULTI-CURRENCY MORTGAGE DUE TO LACK OF TRANSPARENCY

The multi-currency mortgage is a type of loan that allows payment in a currency other than the Euro (Dollars, Yen, Swiss Francs, etc.).

According to recognised sources, Cataluña is the most affected region, with 10,000 cases, followed by Madrid (9,500) and Andalusia (9,000), while the most common profile is that of a professional with a guaranteed fixed income, such as pilots and firemen.

These mortgages were marketed during the years of the property bubble by Bankinter, Barclays -now Caixabank-, Catalunya Caixa -acquired by BBVA-, Santander, Popular, BBVA and Bankia, according to sources.

On 15 November 2017, the Supreme Court declared this type of mortgage partially null and void as it did not pass the transparency control, declaring the partial nullity of the loan and the elimination of all references to the denomination in foreign currency of the loan, which remains as a loan granted in euros and amortised in euros. In other words, it applies the same criteria and grounds as if it were a floor clause.

The consequence? Savings for the borrower of thousands of euros in the payment of his home loan.

BUFETE SALMERÓN, a law firm located in Seville specialised in Banking Law -is claiming on behalf of numerous affected people for the nullity of these types of banking products- and points out that the Plenary Sentence dictated by the Supreme Court considers this mortgage as a complex financial product, as in the case of regular loans – as was the case with floor clauses – and are susceptible to the control of transparency derived from the application of the European Union Directive on abusive clauses, due to the difficulty for the average consumer to understand the risks involved.

As in the case of floor clauses, the Supreme Court has established a doctrine regarding the requirement for transparency in contracts with consumers, stressing the importance of the pre-contractual information provided to customers before signing the mortgage loan, because it is at this stage that the decision to contract is taken.

The statements made by the Supreme Court are relevant, stating that in this type of multi-currency loan, the average consumer, normally informed and reasonably attentive and circumspect, may know that currencies fluctuate, but may not necessarily know, without adequate information, that the variation in the amount of the instalments due to the fluctuation of the currency may be so considerable as to jeopardise their ability to meet their repayments.

Given the lack of transparency, the Supreme Court, considering that the multi-currency clauses do not pass the transparency control, declared the partial nullity of the loan and the elimination of all references to the foreign currency denomination of the loan, which remains as a loan granted in euros and amortised in euros.

The Property Credit Bill will enter into force in the first half of 2018 and provides a solution for the approximately 70,000 people affected by multi-currency mortgages who are awaiting a solution.

The directive provides for the possibility for the consumer to request at any time during the life of the loan the conversion of the credit formalised in foreign currency into euros. However, the measure is not retroactive.

In the words of lawyer Fernando Salmerón, Director of BUFETE SALMERÓN, it is recommended that all those affected should turn to a specialised lawyer and he states that the Supreme Court’s ruling declaring the clause null and void is not retroactive.

At our firm we are specialists in Banking Law and Property Law, and we want to help you. Please contact us on 954 536 038 or 695 694 847.