How to recover money for abusive clauses in mortgage loans?

In this article we explain in detail how you can recover the money overpaid to banks due to abusive clauses in mortgage loans and other financial products. Our specialist lawyers will provide you with the necessary support throughout the claim process.

Let's contextualize the default interest clauses in a mortgage loan:

Default interest clauses are contractual provisions that establish the payment of additional interest to be applied when a borrower defaults on his or her mortgage payments. Although these clauses seek to protect the interests of the lender against delays in payments, their disproportionate application has led to their legal questioning and claim for nullity before our Courts.

A few strokes regarding the Legal Foundations of Nullity Claims:

1. Abusive Character: Article 114 of the Mortgage Law establishes that default interest cannot exceed three percentage points over the remunerative interest. Claims for invalidity are usually based on the consideration that significantly higher default interest rates are abusive and contravene contractual good faith.

2. Lack of Transparency: As in other contractual clauses, transparency is a key factor. The borrower must clearly understand the financial implications of default interest. The Spanish Supreme Court's ruling of June 3, 2016 (STS 364/2016) underlined the importance of transparency in these clauses.

3. Disproportion and Indications of Usury: Jurisprudence has established that the application of disproportionately high default interest rates may suggest usurious practices. In the case known as the "Banco Primero Case" (STS 265/2015, of April 22), the Spanish Supreme Court analyzed the possible usury in default interest rates.

Practical Example:

Economic Impact of High Default Interest Rates Suppose a borrower has a mortgage of 200,000 euros with a remunerative interest of 3%. The contract establishes a default interest rate of 10% (in some cases the financial institution provides interest of up to 29%), well above the 3% limit established by the Mortgage Law. If the borrower defaults and accumulates a delinquent debt of 5,000 euros, the excess default interest rate would be 7% (10% - 3%). Applying this rate to the delinquent balance of 5,000 euros, the borrower would be paying 350 euros in default interest. If this situation continues for three months, the accumulated default interest would amount to 1,050 euros. This example illustrates in a simple way how an excessive default interest rate can generate very significant costs for the borrower. A few relevant case law references:

Suppose a borrower has a mortgage of 200,000 euros with a remunerative interest of 3%. The contract establishes a default interest rate of 10% (in some cases the financial institution provides interest of up to 29%), well above the 3% limit established by the Mortgage Law. If the borrower defaults and accumulates a delinquent debt of 5,000 euros, the excess default interest rate would be 7% (10% - 3%). Applying this rate to the delinquent balance of 5,000 euros, the borrower would be paying 350 euros in default interest. If this situation continues for three months, the accumulated default interest would amount to 1,050 euros. This example illustrates in a simple way how an excessive default interest rate can generate very significant costs for the borrower.

A few relevant case law references:

1. STS 364/2016, of June 3 (Transparency in Default Interests): This ruling highlights the importance of transparency in default interest clauses and its relationship with the validity of the mortgage contract.

2. STS 265/2015, of April 22 (Bank First Case): The Supreme Court analyzes possible usury in default interest rates, establishing criteria to determine disproportionality and abusiveness in this context.

The legal claims of nullity in the default interest clauses are based on possible abuse, lack of transparency and disproportionality. Existing case law supports borrowers' position by establishing legal limits and criteria for evaluating the validity of these clauses.

The data provided seeks to shed light on the economic impact of excessive default interest rates, demonstrating the importance of questioning and, where appropriate, challenging these clauses, nullifying them and their economic effects on the borrower. In an environment where consumer protection is essential, understanding contractual clauses and seeking legal advice are essential tools to prevent adverse financial consequences.