mortgage "floor" clause

[paul and sue]

We are with Solbank and are currently paying 3% interest. Has anyone heard anything from Solbank yet ?

[F1REFLY999]

Also with Solbank....Paying 3.75% for 10 out of the last 12 years. 2008 - 2009 I was paying 4.25% (variable). That's why I was asking what other people have paying as a comparable.

[Snowdrop]

We are with solbank and haven't heard a thing

[jill tie]

We are with Solbank and are currently paying 3% interest. Has anyone heard anything from Solbank yet ?

Also with Solbank....Paying 3.75% for 10 out of the last 12 years. 2008 - 2009 I was paying 4.25% (variable). That's why I was asking what other people have paying as a comparable.

You both sound like you have floor clause mortgages.  I was paying 4% I am now paying 0.988%.  Firefly the reason you paid more pre 2009
was because the rate was higher than your fixed rate of 3.75%.  I think the minimum you should do is ask for the clause to be removed.  They may ask you to sign away your rights to claim compensation.  I refused and they removed the clause any way.

[F1REFLY999]

Just found an email from Solbank from 2013 when I first enquired about the rate I was paying:

Your interest wasn't change due the minimum interest rate you have on your mortgage. In this case the minimum is always 3,75% and maximum 12%. This is the clausula floor signed on your mortgage.

I have arranged for a meeting on the 20th 

[TamaraEnLaPlaya]

In 'El Pais' today:

Spain`s banks must give clients full refund for “abusive” mortgage clauses

Spanish Supreme Court ruling will see lenders having to also repay clients for pre-2013 payments

Spain`s Supreme Court has ordered the country`s banks to refund their customers all the money they earned from applying so-called floor clauses (cláusulas suelo) that set a minimum interest rate borrowers would have to repay on mortgages, even if the benchmark rate â€" normally the Euribor â€" dropped below it, as happened sharply from 2009 on, but that customers with these loans were unable to benefit from.

Spanish courts have ruled that references to floor clauses were often hidden deep within contracts and addressed only in small print.

Until now, Spain`s banks were only required to annul these clauses from May 2013, following a Supreme Court ruling that year. They will now have to pay back earnings dating back to 2009, when they first introduced the clauses, an amount estimated at between â,¬3 billion and â,¬5 billion, and affecting some 2.5 million mortgage holders.

The banks will have to pay back up to â,¬5 billion

The Supreme Court has followed the sentence reached in December by the European Court of Justice, which said the Spanish court`s 2013 decision to limit refunds â€" a ruling made to protect a debt-ridden Spanish banking sector still reeling from the bank bailout â€" “failed to provide complete protection” to consumers” and “did not constitute an adequate and efficient means of an end to abusive clauses.”

BBVA, La Caixa and Banco Popular are thought to be most exposed in the wake of the ECJ‘s decision, with the main focus on Banco Popular after the departure of long-term chairman Angel Ron in the wake of the institution`s poor performance. Bankia has announced it intends to refund charges to all of its mortgage holders affected by floor clauses.

In mid-January, in the wake of the ECJ ruling, the Spanish government and the main opposition Socialist Party (PSOE) agreed on a mechanism for the refunding of charges owned to bank customers. Among the measures included in the legislation is the requirement for banks to inform all clients who have floor clauses in their mortgage terms that a claims process has been opened, one that will be considered voluntary.

As well as returning the overcharged money due to the floor clause, the banks will also have to pay out interest on the capital. The mechanism will have to be in place a month after it is approved by the government. Once the bank has received the claim from the client, it will have three months to present an offer. If an agreement is not reached in this time, the mediation process will be understood to have concluded, and the client can seek legal recourse.

not sure if any of this is 'new' info but thought I would post it just in case.

[F1REFLY999]

Tamara I have documented proof that my contract from 2004 had a hidden floor clause included...I am visiting my local Solbank on Monday so will update asap

[fifi]

Eye on Spain have some great articles about reclaiming. The Lawyer Maria in her blog said that people with a 130K mortgage should get around 15K back on a 30 year mortgage.

"We would need to review your mortgage documents to give you exact figures.

However as an example:

If you took out a 130,000 Euro mortgage in 2006 over 30 years at an interest rate of Euribor + 1% and had a Floor Clause of 4.25%, your monthly mortgage payments with the Floor Clause would be around 675 Euro.  If the Floor Clause was removed then currently you would pay around 475 Euro per month, a saving of around 200 Euro per month.  The overpaid interest on the above example would amount currently to around 15,000 Euro.

See website for complete article and further articles on her blog .https://www.eyeonspain.com/blogs/costaluz/16982/legal-tip-1426-remove-the-floor-clause-from-your-mortgage-and-claim-a-refund-of-overpaid-interest.aspx

Also it looks like bank set up charges might be refunded . Mine were around 680 at the time on a 108K mortgage. When I switched Lawyers (previously with Glex &Co. Rosario) my new Lawyer said that they should not have agreed to those charges and that he could have had them abolished had he been representing me at the time.  So dont forget to look into those too when claiming a refund.

Good luck everyone.

[fifi]

Also from the Legal blog on Eye on Spain.



Legal tip 1427. Questions and answers on extrajudicial (out of court) procedure for the return of overpaid interest due to floor clauses in Spanish Mortgages
27 January 2017 @ 11:45

How to claim a refund of overpaid interest due to floor clauses in Spanish Mortgages

These steps need to be followed:

1.- Claim to your bank office/branch



2.- The bank must send to the consumer the calculation of the amount to be returned, including interest or, where appropriate, the reasons why it considers 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 bank will return the agreed amount either by crediting the customers bank account or by reducing the amount of the outstanding mortgage.

The whole process must be completed in a maximum period of three months

Can I claim if my mortgage has already been paid off?

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

Can I claim if I have already received a refund of overpaid interest from the date of the Spanish Supreme Court Sentence in May 2013?

This matter will depend on a new Court ruling by the Supreme Court which is expected to be issued in the next couple of months.

My bank has informed me that my mortgage has a floor clause.  Does that mean the Bank is also refunding voluntarily?

No. The Royal Decree makes it 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 customers who they consider need to be repaid.  Banks will inform other customers why they consider they should not be refunded.  Banks may refuse to refund the amounts if the bank believes that the customer was a financial professional who was fully aware of the clause and/or that the bank fully and transparently informed the customer at the time of taking out the mortgage about the inclusion of the clause in the mortgage and its effects.

When is a Floor Clause transparent?

a) The consumer must have been expressly informed that when the variable interest rate linked to the Euribor goes lower than a determined point, the interest rate effectively becomes fixed at a higher rate.

b) The consumer must have been informed that with a Floor Clause he will not benefit from the drop in the EURIBOR below a certain point.

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

d) The consumer must have received information on other products without a floor clause as a comparison before accepting the mortgage.

If the bank is not going to give me back the money, should it still provide me with the calculation of how much extra I have been charged due to the clause?

No. They will only provide the calculation if they consider that the inclusion of the clause in the mortgage was not transparent.

Will all customers receive their refunds in cash/credited to their bank account?

The first offer must be in cash/credited to the customers bank account, however the customer and the bank may agree on different compensatory measures, such as a reduction in the amount outstanding on the mortgage.  In this case, the acceptance by the client will be in writing, 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 notary and registry fees resulting from amending the mortgage contract that may result from the acceptance by the client of alternative measures other than cash repayment.

What if I have sued the bank and now I want to negotiate with them?

Those judicial proceedings that are already in progress can be, by mutual agreement, suspended to submit the claim to the extrajudicial procedure.

Can I go to court after negotiating with the bank?

Yes, although you must wait until the out of court/negotiation process is completed.  In regards to court costs, mechanisms are established in the Royal Decree that encourage the entity to resolve properly and in good faith.

If the consumer claims against the bank in court after failing to reach an agreement in the out of court/negotiation stage and the judgment that he obtains is economically more favourable to him, the bank will be ordered to pay legal costs.

On the other hand if the consumer goes to court directly without using the out of court/negotiation procedure and the bank 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 customer claims in court and the judge grants an amount lower than what was offered by the bank, the judge may see bad faith in the need for going to court and the Judge may not impose costs on the bank.  Therefore, you will pay your own legal 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”

[fifi]

This one is about how the Banks may have to reimburse for mortgage set up costs etc

El blog de Maria
Your daily Spanish Law reporter.

Legal tip 1428. Santander, BBVA, Caixa & Bankia are coordinating on a new mortgage deed standard template
01 February 2017 @ 13:29

Four of Spain`s biggest banks, Santander, BBVA, CaixaBank and Bankia, have taken account of the legal challenge regarding the floor clauses and have launched an image cleansing operation that will, among other aspects, implement a new generalized model of mortgage deeds in Spain.

The objective is for the Bank to assume some of the administrative costs related to opening a mortgage, which until now have been automatically imposed on the borrower.

A recent Court decision by the Supreme Court has called into question the situation where all mortgage opening costs are imposed on the borrower, including taxes, commissions and other costs incurred in preparing, rectifying and processing mortgages. The Supreme Court has been particularly incisive in dismissing two appeals filed by BBVA and Banco Popular against a complaint filed by the Consumer and Users Organization (OCU).

The big Banks have 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 deeds are adopted for the benefit of the lender, which does not allow reciprocity when distributing these types 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 avoid future court cases.

To that end, the expenses of the 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 results at least by establishing agreements 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, this new attack on the Banks could cost around 18 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.

[Dinkys]

Does anyone know if there is a standard letter to send to the bank?

[fifi]

There probably are some to be found on the net. If I come accross one I will post it here for you.

[Séan J.]

Hi fifi
am I reading this right does the Bank have to get in touch with me within three months.

Many Thanks
Sean J.

[F1REFLY999]

Further update

Went in to see the manager at Solbank Caleta today, had to fill in a claims form (no official forms) so had to borrow a piece of paper and a pen. Wanted my mortgage details and an official signature, stamped and sent off to their customers service department. I asked for the floor clause to be removed instantly but was told I would have to wait to see what the customer service department said

She did state that's the claim only went back to 2013.....we will see what develops!

[fifi]

Hi fifi
am I reading this right does the Bank have to get in touch with me within three months.

Many Thanks
Sean J.

Hi Sean I think you have to get in touch with the Bank yourself first . They then get back in touch with you and if you qualify they have a period of three months to sort it out to your satisfaction. At least that is my interpretation of it.

[Snowdrop]

Got to comment on how helpful Tamara and FIFi are - a huge well done and thanks for your posts 😃

[Deso]

Another update from Eye On Spains resident lawyer, Maria

Legal tip 1431. Floor Clauses â€" Supreme Court confirms refund of ALL overpaid interest
21 February 2017 @ 12:26

Following the Sentence issued by the European Court of Justice in December 2016 regarding the retroactive effect of nullity of abusive Floor clauses (Cláusula Suelo), Spain`s Supreme Court has now ordered Spanish banks to refund their clients all the money they over-paid due to the Floor Clauses. The Supreme Court Sentence was issued on 15 February 2017.  The full text of the Supreme Court Sentence has not yet been published, just an abstract of the decision is known at present.

What is a floor clause?

These clauses set a minimum interest rate that borrowers would have to repay, even if the reference index (Euribor) dropped below the minimum interest rate, as happened from 2009 onwards.  Therefore mortgage holders with this clause in their loan were unable to benefit from the fall in the Euribor.

It is not specifically the Floor Clause that is illegal but the way it was included in mortgage contracts without its effect being fully explained to the customer.  This lack of transparency and lack of information is the reason this clause is deemed abusive.

What does this New Court Supreme Court ruling add?

With this February 2017 Court sentence, Supreme Court Case Law is now clear on the refunds that are due if a Floor clause is considered abusive due to a lack of transparency.  Refunds must be paid from day one of the client being overcharged, instead of only from May 2013 as was decided by our Supreme Court back in 2015.  Legal interest will also be applied to all refunded amounts.

How should I Claim?

A refund procedure is being prepared by the Government.  Once the bank has received the claim from the client, it will have three months to present an offer of settlement.  If an agreement is not reached in this time, a judicial action (Lawsuit) will be necessary.  Special Courts are also being created for these cases.

As an additional note: if you are currently negotiating giving the property back to the bank (Dation) or are in the process of a repossession procedure, the existence of a floor clause can help the efforts to succeed.

[wavell ave]

hi we paid our morgage  for 10 years then we paid it off will this affect the bank debt

[jill tie]

hi we paid our morgage  for 10 years then we paid it off will this affect the bank debt

Cant see why it would effect what you are owed.  Whatever you have over paid should be refunded with interest.   In the Uk that is 8% per annum not sure what it would be in Spain

[scorpio1966]

Hi ,
just wondered if anyone had heard anymore regarding the floor clause ?
Did the same as firefly and went into solbank.
word for word the same except they would not accept our our claim on lined paper (strange )
they said they would be in touch in the next week or two.
we will see.
scorpio

[F1REFLY999]

Was also told I would hear within a week.....but still nothing from Solbank

[scorpio1966]

I figured that might be the case firefly.
Has anyone heard of any of the banks paying out what is owed yet ?
I guess the next step is a few gentle reminders ,then legal action.
Did you get any offers to freeze your mortgage rate before all this came out firefly ?
regards scorpio

[F1REFLY999]

I was offered nothing from the bank...even when I asked for the clause to be removed immediately I was told that this could not be done until it went through customer services. My suspicion is that the reduction in your interest rate will be a bargaining tool regarding off setting any money owed to you by the bank.

[scorpio1966]

we did not accept the banks offer of a fixed rate as we were told this would invalidate any floor clause claim as you are effectively changing your mortgage conditions.
i tried contacting solbank at the time to explain this but they would not reply to any emails i sent.
I know it will be a long slog but may be worth it in the end

[TheCooler]

We refused Solbanks fixed rate offer.
They really are a bunch of idiots... They're fixed rate offer was the same rate that i am paying now with the floor collar.
So a saving of â,¬0, you couldn't make it up.

[raye]

I am with Banco Popular and 2 years ago they agreed to remove the clause temporarily for 3 years. I have spoken with their Head Office in Madrid and i can go in to any Branch to sign a document which puts the wheels in motion. It is best to go to the Branch where the mortgage was taken out, so i have contacted Caleta Branch and will go in early April to sign the document. They then have 3 months in which to make a decision.
I will also be pursuing initial set up costs and the fact that i had to take out a small pension and life insurance in order to secure the mortgage 10 years ago.

[Séan J.]

We are also with Banco Popular, we got the same letter I think, we have a meeting with our Solicitor next week,to let them sort it out as they were the ones who signed for our mortgage.

[jill tie]

Has anyone had any money back or even a response from their bank yet?   I believe they have 3 months to respond and as the ruling was made in December isn't their time up?

[Séan J.]

Hi jill
we went to Solicitor filled out form she said its 3 months from time of lodgement. 

[Captain Sensible]

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