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Spain - Court Rules “Repossessed Property Covers Excess Mortgage Debt

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http://live.kyero.com/2011/01/28/court-rule-repossessed-property-covers-excess-mortgage-debt/

In what could be the beginning of a change in Spanish law, a judge in Navarra has ruled that the proceeds gained from the sale of a property repossessed by a bank should be sufficient to clear the former owner’s debt.

Under current Spanish law, mortgage lenders have the right to make a claim on all of a borrower’s assets and not just the home on which the mortgage was based on.

In this case, the borrower had an outstanding debt of 28,129 euros from an original 71,225 euro loan, after the lending bank, BBVA, sold the property in Navarre for 42,895 euros. Once sold, the bank continued to demand mortgage payments and the case ended up in court.

The judge surmised that the fall in value of the property was a direct result of financial mis-practice. “The truth is that the bank was awarded a property which they themselves has valued too highly,” justified the judge.

It was noted by the Navarra court that just a few days previously, the Congress of Deputies has begun to consider a proposal whereby “the secured obligation of mortgages should only be effective on the goods mortgaged, and should not apply to other assets of the debtor.”

BBVA plan to appeal the decision and it should be noted that a regional court’s decision does not set a precedent for other cases, this would require two Supreme court judgments. However, there is a strong prospect that other repossessions will head to court in the hope that other judges rule in a similar fashion.

There will clearly be an appeal but this could be an important decision if it's upheld.

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I am sure the appeal court judges are on a banksters funded re-appraisal course as I type.

The lower court judges lean more to the common man. Higher courts are accountable to a far more powerful entity.

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I think it's right though. the banks are the professionals and are supposed to be trained and equipped to do risk assessment.

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I think it's right though. the banks are the professionals and are supposed to be trained and equipped to do risk assessment.

... :lol: ...their lending was all about commission generation , market share and bonuses....risk assessment was not in the equation it appears....... :lol:

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I think it's right though. the banks are the professionals and are supposed to be trained and equipped to do risk assessment.

By that I assume that you mean that as the banks should have done due diligence then they're liable to cover the negative equity from their own funds.

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By that I assume that you mean that as the banks should have done due diligence then they're liable to cover the negative equity from their own funds.

...you credit them with the insight of the people on this forum....the retail bankers were not that bright and if they were it was blinded by greed.... :rolleyes:

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http://live.kyero.com/2011/01/28/court-rule-repossessed-property-covers-excess-mortgage-debt/

There will clearly be an appeal but this could be an important decision if it's upheld.

If it stands it makes spanish debts non-recourse.

Spanish banks would see jingle mail go through the roof.

Prob 10k keys returned a week.

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IMO that is fair

Also, if the bank accepts the valuation at the time of making the loan and there is no material change to the loan - i.e. property maintained, no MEW, payments up to date etc. then I think its very wrong of the bank to suddenly pop along and say the value of the property has fallen and you are in breach of LTV, therefore you must tip up extra

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I assume there will be another appeal to a higher court? Or was this at the highest Spanish court?

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... :lol: ...their lending was all about commission generation , market share and bonuses....risk assessment was not in the equation it appears....... :lol:

What risk? Any shortfall they have will be picked up by the tax payer in one way or another when the banks are bailed out, this is an exercise in spreading the obligation from one person who it is known is not in a position to pay it back to the millions of tax payers who can pay it back. Genius.

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I assume there will be another appeal to a higher court? Or was this at the highest Spanish court?

Not really sure but I think they can appeal to the Spanish Supreme Court.

I don't see how this system can be maintained long term, it makes no sense for a democratically elected government to favour the bank rather than the citizen when so many people are affected. Also it pushes the economy underground as the bank can't take money that you don't declare.

It is pretty monstrous that the Bank can pursue you forever for your Mortgage and I would be surprised if it would stand up in a European Court.

I would think there will be some pretty lively debate in Spain about this, especially with the elections next year.

Foreign investors who are holding €300bn+ in Spanish mortgage debt will certainly be shifting uneasily.

More info (http://www.20minutos.es/noticia/1015923/0/hipoteca/recurso/bbva/)

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With a bit of luck on appeal the bank will get the money from the borrower to pay back 100% of the loan as well as some Spanish bailout money for the house collapsing in value. If bonuses and incompetence starve the banks of enough money they'll never have to pay back the bailout. The borrower can go bankrupt and likely go on the dole - and the rest etc. Probably some form of legal aid somewhere along the line as well as state accommodation. The bank might not even have to sell the foreclosed property.

Then once Portugals problems have blown over a bit then Spain can get in line for a few more hundred billions of euros from the eu's bailout fund for shovelling to the banks

Taxpayer (and FTBers as well as tenants) loses all round every which way but at least the banks survive and get their mega bonuses <_<

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It is pretty monstrous that the Bank can pursue you forever for your Mortgage and I would be surprised if it would stand up in a European Court.

More info (http://www.20minutos.es/noticia/1015923/0/hipoteca/recurso/bbva/)

If the Spanish banks go belly up the UK tax-payer will be very hard hit.

I would much prefer the house buyers to take the pain - they would quite happily take any profit.

Caveat emptor after all.

Edited by mfs1959

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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