# (for the first time) Spanish Court Clears Mortgage of repossesed house



## pjuegos (5 Feb 2011)

Hi all,

A very interesting case arose last week in Spain. Apparently, a couple was behind on mortgage payments and had their house repossesed. 
The total mortgage was 71,225€. The bank tried to sell the house in a public auction but found no buyer.  Then, the bank had a valuation of the house, which was this time valued in 42,895€. Following normal Spanish legal procedures, the bank sued the borrowers to reclaim the outstanding debt of 28,129€. 

Now, is when things get interesting; 
According to El Pais  newspaper "The judge ruled that the house’s fall in value was a direct result of the financial crisis that stems from financial mispractice and it was "morally repellent" that the bank should make additional claims on the borrower". The brave judge also stated that 71,225€ was the value that the bank had assigned to the property when it granted the mortgage loan. So, no reasons to claim for additional assets...

www bloomberg.com/news/2011-01-27/spanish-court-rules-repossession-clears-mortgage-el-pais-says.html
www thespanishbrick.com/2011/legal-advice/first-keys-hand-over-to-the-bank-to-get-rid-off-mortgage-loan/1532
antonioguillen.co.uk/2011/01/some-hope-for-spanish-home-owners-in-mortgages-arrears/

 
The mortgage system in Spain is similar to the one in Ireland, where the borrower is liable to the whole amount of the mortgage, regardless of house market prices.

This was an exceptional (but isolated) case. Do you think something like this could happen in Ireland?


Cheers


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## Time (5 Feb 2011)

It could happen there are a number of cases before the courts at the moment.


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## jambo (6 Feb 2011)

Seems to be a low court. I'm assuming the bank will appeal. This has a bit to run yet.


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## pjuegos (6 Feb 2011)

Yes, the bank,  BBVA, has appealed the court decission. 
And yes, it was a regional court. Apparently it will require two Supreme court judgments in order to constitute a precedent.

However, another judge in Barcelona has also cancelled the debts of  another couple a few days after that. If the domino effect arises among  judges I wonder what the final outcome would be


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## jambo (7 Feb 2011)

As you say, we'll need to see what the Supreme Court says. Presumably this will be fast-tracked throught the court system given the widespread implications?


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## Bronte (7 Feb 2011)

pjuegos said:


> r "The judge ruled that the house’s fall in value was a direct result of the financial crisis that stems from financial mispractice and it was
> 
> "morally repellent"
> 
> that the bank should make additional claims on the borrower".


 
I doubt that something being 'morally repellent' will have a sound basis in law.  

But the Spanish Supreme Court may go for the 'financial mispractice' of the banks.  

Might be of interest to those barristers who are working for free for Irish mortgage holders.


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## pjuegos (7 Feb 2011)

Bronte said:


> Might be of interest to those barristers who are working for free for Irish mortgage holders.



Like "the New beginning" group?


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## Time (7 Feb 2011)

Yes.


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## jambo (9 Feb 2011)

Bronte said:


> I doubt that something being 'morally repellent' will have a sound basis in law.


Equity?


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## Bronte (9 Feb 2011)

Actually jambo that link reminded me of something.  The Spanish courts don't have a common law system so their thinking and rules would be different.  Maybe 'morally repugnant' is valid there.


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## prentice (18 Feb 2011)

Any updates on this pjuegos?
Looks like Fine Gael have a definite interest in Neg Eq horizontal transfers though.


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## pjuegos (23 Feb 2011)

Hi prentice,

As far as I know,  there are no major updates.

I think it is going to be very difficult for that Navarra judge to get away with it. The Spanish minister of justice has already said that a change in law to accomodate the American model (keys are handed back and bank cannot claim additional assets) is out of question. 

Only a domino effect of brave judges acting as that Navarra judge could trigger some change in law...


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