Steps for Claims on Floor Clauses in Mortgage contracts

Questions and answers on extrajudicial procedure for return of undue interests in floor clauses.

Where and when to go to claim interests back linked to Floor Clauses? 

These steps need to be followed:

1.- Claim to your bank office
2.- The bank must send to the consumer the calculation of the amount to be returned, including interests or, where appropriate, the reasons why it considers that the claim is not appropriate.
3.- Upon receipt of the communication, the consumer must state whether he agrees with the calculation and, if he does, the entity will return the cash.
The whole process will be done in a maximum period of three months

Can I claim if  my mortgage  has already been amortized? 

Yes, you can. Deadline for the claim is 15 years.

Can I claim if I have already received a refund  of amounts from 2013?

This matter will depend on a new Court ruling by the Supreme Court which will be out within the following weeks. 
My bank has communicated to me that my mortgage has a floor clause.  

Does that mean  Bank is also refunding voluntarily?

No. The Royal Decree makes obligatory for Banks to  "ensure that this system is known by all consumers with floor clauses in their contracts". However, it also clarifies that Banks will only do the calculation of the amount to be returned to those who they consider  that need to be repaid.  Banks will inform other clients why they consider they should not be refunded. ( as the clause not being opaque)

If the bank is not going to give me back the money, should  they  make me the calculation of how much I have been charged with the clause?

No. They will do the calculation just if they consider the clause is opaque.

Will all clients receive their refunds in cash?  

The first offer must be in cash, but the consumer and the entity may agree on different compensatory measures, such as the novation of the mortgage conditions. In this case, the acceptance by the client will be handwritten, having been duly informed of the economic value of the alternative measure.

What are the consequences of initiating the claim with the bank?

According to the decree, "the consumer may decide to go to court directly but once the extrajudicial proceeding has been initiated and until it has been resolved, the parties may not exercise any alternative judicial or extrajudicial action in relation to the same claim".

Is the procedure with the bank free?

The extrajudicial claim procedure is free. There is also a substantial reduction of notarial and registry fees resulting from novations of contracts that may result from the adoption of countervailing measures other than cash repayment.
What if I have sued the bank and now I want to negotiate with him?
Those judicial proceedings that are already in progress  can be,  by mutual agreement, suspended to submit the claim to the  extrajudicial procedure.

Can you go to court after negotiating with the bank?

Yes, although we must wait until the process is completed. In the case of court costs, mechanisms are established in the Royal Decree that encourage the entity to resolve properly and in good faith.
If the consumer claims the entity after not reaching an agreement in the out-of-court claim and the judgment that he obtains is economically more favorable to him, the entity will be ordered to pay legal costs.
On the other hand, if the consumer goes to court directly without using the previous claim and the entity fully settles  prior to the process of answering the claim, the entity will not be ordered to pay costs.

Can I pay costs if I go to trial?

Yes, if  a client claims  and the judge grants an amount inferior  to what has been  offered by the bank, the judge can see bad faith in the procedure and  the client could be sentenced to court costs.

Will taxes be paid after receiving the money claimed?

It is not clear at all. For the time being, the Government has said that in order to adapt the tax treatment of the amounts received, "the IRPF Law will be reformed so that, in case of refund of amounts wrongly collected by floor clauses, either by agreement or by judicial or arbitration decision, fiscal neutrality is ensured to the buyer.
 

Excellent post Maria.

Do these procedures go to small claims courts, as I'm wondering if this will exacerbate the already overstretched court system that is suffering major delays?

Ads:

It is an extrajudicial process which needs to be solved by Courts within 3 months.

Then, if there is a need to go to Courts, claim will be decided through an initial debt payment procedure which then is transformed in either a longer or shorter process depending on claimed amount being under or over 6000€. 

For claims over 2k, Court agent and Lawyer are necessary

Un saludo!

María

According to www.surinenglish.com

Banks told to fast track payouts to customers with mortgage 'floor clauses'

Government sets out clear steps for financial institutions to follow, although homeowners could still take a bank to court if they wish

The national government has reached a deal with the Socialist and Ciudadanos parties that lays down a process and timetable for banks to refund money overcharged to mortgage holders with 'floor clauses' (cláusulas suelo) in their contracts.

The plan, which banks must follow, was approved by the Cabinet on Friday. It sets out a process that avoids an estimated 1.7 million mortgage holders, including many homeowners from abroad, having to take drawn-out legal action and overloading Spanish courts.

The plan does not, however, oblige banks to contact all their affected clients individually to inform them of their rights to claim back funds paid as a result of the banks not applying low interest rates due to the 'floor clause'.

From now on, however, a borrower can claim a refund directly from the bank without having to go to the courts. Customers can still take legal action though, if they choose to.

The move comes after the European Court of Justice (ECJ) ordered Spanish banks to refund customers whose mortgages contained clauses that prevented their repayments being reduced below a base or 'floor' level as euro interest rates plummeted after 2009. The ECJ said that banks had to refund all overpayments, not just those from 2013 as Spanish courts had originally decreed. A bank is only liable to refund if the 'floor clause' wasn't properly explained when the mortgage was taken out.

Some banks could argue that customers were aware of the clauses before signing original deals
Banks are required to make a refund offer which also includes interest for the time they have held on to the money. Where a bank wishes to offer a non-cash refund, for example by reducing future mortgage payments, the offer must be at least the same as the cash amount. The customer then has two weeks to decide.

Financial institutions should inform all their customers with 'floor clauses' about the newly-approved process, although not all banks had these clauses in contracts. A government-led commission will be set up to check the rules are being followed.

Government can't do more

It's expected that some banks will argue that their customers were aware of the clauses when they signed their original mortgage deals and so will not offer compensation.

Minister for the Economy, Luis de Guindos, pointed out that the new process was "complementary" to a legal route and that "it was still an option to go to court".

He added that once the compensation offer was made, there would be "negotiation between bank and customer", saying that as this was between private parties, the government could do no more.

Mortgage holders will have to declare any windfalls to the taxman.

Thank you Maria.

What evidence would any Bank have to bring to this extrajudicial process to prove that the mortgagee had been made aware of or had prior knowledge of "clauses that prevented their repayments being reduced below a base or 'floor' level as euro interest rates plummeted after 2009"?

This appears critical to the process with regard to achieving a successful outcome.

A silly question

How do people know if they have a floor clause in their mortage contract or not as they are often in the small print?

Ads:

That is exactly the point Anne. You---- acute as always--- highlighted it.

Criteria of the Supreme Court for considering a Floor Clause as transparent is as follows:

a) The consumer must have been expressly informed that when legal interest rate goes lower than a determined point, mortgage loan becomes fixed rated.

b) The consumer must have been informed that in that case, he will not benefit from lowerings of the reference index such as  EURIBOR:

 c) The consumer must have been informed in a clear and highlighted way on the inclusion of the clause.

d) The consumer must have received information on other products without that limiting clause, for a comparison.

If a claim has been made to the bank, direct, but it is now over four months since submitting that claim (ie outside the three month "out of court" settlement period) and the bank have not responded at all (neither acknowledged the claim or made an offer), what is the next process?

Ads.  When you mention the base rate being the clause?..........

I think of the base rate being the interest rate set that the banks adhere to (the bank rate set by the European bank, Bank of England etc.).   

Mortgages usual have a minimum rate percentage or for example 2% above base rate as part of the mortgage product.

Is this the charge that can no longer be levied by the bank, or am I misunderstanding this?

Maria could you answer these outstanding queries please?

Many thanks.

Ads:

What are those?

Thanks

M

Hi Maria

I would really appreciate your advice on my query here:

22 Sep 2017 17:59 by Pitby  in Andalucía. 1899 posts

If a claim has been made to the bank, direct, but it is now over four months since submitting that claim (ie outside the three month "out of court" settlement period) and the bank have not responded at all (neither acknowledged the claim or made an offer), what is the next process?

Pitby:

Next step is judicial claim

M

Thank you Maria - as I thought.  Fortunately, though, we just yesterday received a response from the bank!  So fingers crossed! 

The banks are a bit of a lottery. There is no knowing how they will react to your claim. When I claimed for the first clause repayment a few years ago, they refunded me in a few weeks. When I put in a claim for this latest ruling 6 months ago, I got a reply within the 3 months deadline with a breakdown of what refund was due for each year. I phoned the bank to ask what the interest rates were for each year on the date my rate was set for the following 12 months and was told this information can be found when you log in online. What I found is that they have withdrawn all information from the start of the mortgage to the date the first clause pay-out was done. I wonder if this is to stop people calculating what amount they are actually due back. Hmmmm, but they were not going to pull the wool over my eyes. I phoned the bank and asked them what date each year my mortgage rate is set as it is recalculated every 12 months. I then went online and found out what the Euribor rate was on this date then added the banks percentage charge on top. I then dug out all of the old paperwork, went online and found a mortgage calculator that gave you a breakdown of interest and capital and calculated what interested was charged for that specific year, then started again with the new balance and new 12-month interest rate. I then compared this to the interest rates the bank was charging me to work out what I had been overcharged for each year. In the meantime, I received another letter from the bank saying I no longer qualified for the refund. I decided not to reply, but to continue working out what I should be getting. It takes a bit of time to do, but it's well worth doing it. I calculated they owed me more than double than what they originally offered. I think the banks are chancing their arm by offering a lower amount back in the hope that people just accept it. The problem is, if you do, it says in the letter it is a full and final claim if you do. 

I then contacted my solicitor to say, surely, they have already accepted liability by offering me the refund. Before I got a reply from my solicitor, I checked my mortgage account and found the bank had lodged a 50% increase on the original amount offered into my account even though I had not disputed their recent refusal. So, it goes to show you have no idea how the banks will react. 

My advice to everyone is, do your homework. Phone the bank and find out what date your mortgage rate is set. Go online and find the Euribor rate for that date. Add the banks percentage charge. Find out the balance outstanding the day before the first payment of the year is due, remembering it won't necessarily be 1st January. Use the mortgage calculator to find out what the capital and interest is for each year. Copy and paste each year’s table into a document to send to the bank, and write a cover letter to make the clause refund claim requesting a reply within the 3-month deadline as written in law. Hopefully by doing this you will get a far bigger pay-out and they won't try to pull a fast one on you.

Good luck.

Good luck Pitby!.

Well done Westport!

Keep us posted

M

Excellent informative posting Westport BUT please can you ask your legal representative to report back using the official channels (reporting mechanisms in place to protect) to the Bank of Spain and your Bank, to OFFICIALLY report and put on record the failure of the Bank to automatically fully adhere to their legal responsibilities to provide a comprehensive and realistic breakdown of all necessary detail to ensure their full compliance and accountability.

To expect all individuals to follow through the complex processes you identify acts as a prime example of the Banking failures and breakdown of trust in this regard.

Only when these official channels of communication intended to monitor and protect are consistently used by the legal fraternity on behalf of their clients, will the Bank of Spain and Banks be made truly accountable for their ongoing abusive and manipulative practices that destroy trust and have the potential to further undermine the mortgage industry in Spain.

Hi Maria

Thank you for your kind words. I have seen you on EyeonSpain for many years now. You deserve an award for what you have done helping people over the years in your own free time. Keep up the good work. 

Ads

At no point did I use a solicitor to make any of the claims. I only contacted my solicitor when I got the letter saying I was now not getting the refund. The next thing I knew, they had already put the money in my account. I decided not to bother chasing them for the rest of the money being dragged through the courts etc, and the additional costs. Not worth the stress.

One other point, the letter I then received said if I had contacted the bank within 3 days, then the money refunded could be used to pay down the mortgage without penalty. As I was away when the letter dropped through my door, I phoned them and they still let me use the funds to reduce the mortgage. Make sure you tell them you want to use the funds to reduce the term of the mortgage not the payments, otherwise you will pay more interest over a longer term if your bank gives you this option.

Hope this helps everyone.

Westport,

By using the funds to  reduce the term of the mortgage is this not offset by an administrative fee to do so, and also what was the website you used to calculate how many years the fund equated to, in terms of reducing it in this way? This would no doubt greatly assist those reviewing such options available to them.

Hi Ads

I used an American online mortgage calculator, so just ignore the Dollar signs when you enter your figures, take it as Euros.   http://www.free-online-calculator-use.com/extra-payment-mortgage-calculator.html#calculator

There was no admin fees for the overpayment. For some strange reason they would not let me use the exact amount of refund to reduce the term of the mortgage, I had to pay either a slightly lower or higher amount to fall in line with their exact monthly payments.