4 big banks in Spain: Santander, BBVA, CaixaBank and Bankia, has taken on the legal challenge on the floor clauses and has taken action to launch an image washing operation that will, among other aspects, implement a new generalized model of mortgage deeds in Spain.
A recent Court decision by the Supreme Court has called into question the so-called 'exclusive account' expenses of the client, which include taxes, commissions and other costs incurred in preparing, rectifying and processing mortgages. The high court has been particularly incisive in dismissing two appeals filed by BBVA and Banco Popular against a complaint filed by the Consumer and User Organization (OCU)
Big Banks has set up a working group with the collaboration of the AEB (Spanish Banking Association) to find a solution that can be adopted by common agreement among the main financial groups in the country.
The Supreme Court finds that the guarantees incorporated in the deed are adopted for the benefit of the lender, which does not allow reciprocity when distributing this type of expenses, which usually always fall on the client. This criticism has been instrumental in the proactive attitude of banks to change contract models and to scare the burden of proof in future court cases.
To that end, the expenses of Property Registry, which ensure the rights of the creditor against third parties, are directly assumed by financial institutions.
The other two large items that decisively increase the cost of mortgages are notary expenses and Stamp Duty; this last one being the most important of all charges that a holder of a housing loan has to assume. At the moment, banks do not seem so committed to the cause of admitting responsibility for such expenses, but it is very likely that social pressure ends at least by establishing meeting points to distribute the amounts in the future, so that the client only has to assume half the bill that involves the contracting of a mortgage loan.
Financial institutions expect the forthcoming Supreme Court rulings to recognize these efforts with borrowers and help determine Supreme Court case law in a less negative sense for their interests. Not surprisingly, the new sword of Damocles that lurks the banks reaches 18,000 million euros, a figure resulting from multiplying the six million mortgages registered for the 3,000 euros that, in round numbers, formalization costs imply. In short, a hole that, taken to its final consequences, is four times more than the famous floor clauses
( Partial translation of El Confidencial´ http://www.elconfidencial.com/empresas/2017-02-01/santander-bbva-caixa-bankia-modelo-escritura-hipotecaria_1324292/
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