09 Nov The definitive judgement that allows you to claim for your multi-currency mortgage

One of the financial products that has led to more condemnations for banks and in turn has been more prejudicial for clients has been the so-called multi-currency mortgages. In this post we will explain how it works and the latest jurisprudential news for your claim.

Operation of multi-currency mortgages

In summary, a multi-currency mortgage is a loan in which the repayment of the principal is made in a currency other than the one in which the capital was lent, in general banks established Yen, Swiss francs, etc.This influences not only the determination of the monthly installments, but logically the capital pending repayment. And also the interests were not referred to the EURIBOR, the most common index, but Libor.

This kind of mortgages were commercialized when the interest rates were very high, as an attraction for certain types of customers that, according to the entities, with this type of products would be benefited.

The problems arise because in this type of loans the fluctuation of the currencies to which they are referred is essential. Thus, when the yen or the Swiss francs began to rise against the euro, the debt of the borrowers began to increase, with the consequence that 10 years after signing the loan, a consumer may even owe more money to the bank than he received on loan.

The risks and fluctuations to which the loan could be subjected is the reason why  financial entities are required to provide special information, transparency and control in the commercialization of said products.

Therefore, right now you can claim against your bank and get back the interest overpaid and the conversion to Euros of the mortgage.

In these types of procedures, 3 fundamental questions are raised:

• Lapsing of the legal action.

Entities tend to defend themselves claiming that the 4-year term for filing the lawsuit  has elapsed, given that the client was aware of the nature of the contracted product from the first moment. That is why all claims filed after 6, 8 or 10 years should not prosper, according to them.

The Courts do not contemplate this thesis and therefore there is no obstacle to claim, because until the loan is consummated the term does not begin to expire or in its absence when there is a total and complete knowledge of the damage.

• Complex nature of the product and breach of obligations by the Bank.

The Supreme Court also emphasizes that although multi-currency mortgages are not under the regulation of the retail investor protection, they are complex products and the Bank has special transparency duties.

• Partial nullity of the multi currency clause.

This was the last sticking point that could bring any doubt. It is precisely on this last issue that the Supreme Court has ruled in a judgment that has been published a few days ago.

The Court concluded that the partial nullity of the multi-currency clause can be requested, with the remainder of the loan remaining in force, without the debtors having to return all the borrowed money.

The judgment is very important because it banishes any kind of doubt about claims for nullity of multi-currency clauses, facilitating claims to customers.

That’s why the borrowers are now in the best moment to enter a legal process  against their Bank and put an end to the abuse of the multi-currency mortgage. With good advice and specialised lawyers, there can be no obstacle to claiming the amounts we have overpaid.

Attention! Caution with the offers of the entities

It is necessary to be careful because entities have been offering “solutions” to clients such as the conversion to euros of the mortgage or the novation of the deed.

You have to know that this solutions only serve as a patches to cover the because they do not recognize all of the amounts overcharged to the borrower. If the mortgage is converted into euros, the Debt Consolidation occurs for all purposes, with the outstanding capital at that time and then it will no longer be possible to claim anything.

And in the case of novations, the banks try to establish a grace period, more with the intention of avoiding a judicial claim than of resolving the situation in favor of their client, in both cases they do not suppose a definitive solution.

If you have a multi-currency mortgage, or you think you may have it, do not hesitate to contact the Navarro Llima Abogados team and seek advice to defend your rights

Héctor González

Lawyer.