Borrowers win 90% of claims against banks for mortgage set-up costs

Photo credit: Images_of_Money / Foter.com / CC BY

Spanish courts are leaning heavily in favour of borrowers in the avalanche of claims for mortgage set-up costs. To date, 18 provincial courts have passed sentences on who should meet these costs and in most cases they consider it unfair that the client should pay them in full. Specifically, 9 out of 10 sentences rule in favour of the borrower.

It’s worth remembering that the cost of setting up a mortgage averages around €3,000. Some 8.2 million clients could file claims for the set-up costs.

Over the last few months, many banks have started paying the costs for new mortgages. BBVA, for example, already pays registry and mortgage deed costs. Santander pays for registry costs and the first copy of the mortgage deeds. Bankia, CaixaBank, Bankinter, Sabadell, BMN and Abanca also take on part of the costs.

Although most court sentences rule in favour of clients, the new mortgage law, about to be debated in parliament, doesn’t specify who should pay the costs in future mortgages. Sources from the Ministry of Economy claim that the contract should clearly state who is paying for each cost, not who should pay for it.

Claims from clients who paid mortgage set-up fees in full is just one of the legal fronts facing the financial sector. They’re also in the midst of claims for interest-rate floor clauses, multi-currency mortgages, and repossession clauses.

Specialised courts have been set to deal with these cases, one per province, although the avalanche of claims is grid-locking the system.  Magistrates have called for an increase in resources for these courts.

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