Month: November 2018

Floor Clause Debacle Shows Importance of Mortgage Brokers

Floor Clause Debacle Shows Importance of Mortgage Brokers

The judicial system in Spain has not succeeded in its attempt in dealing with the so-called floor clause cases of which hundreds of thousands have been brought into court.

There have been 54 courts set up, one in each province, which is designed to handle the huge onslaught of cases that are proving to be an overwhelming amount of work. There have been more than 260,000 cases filed. Of those, about 52,000 have reached a formal conclusion. That is just 20 percent of all cases.

There have been many victims who claim to have waited a year before having their case admitted. This issue was not helped by banks who have been challenging each ruling even though they have lost 97 percent of the cases.

Lenders have been creating another bottleneck of appeals cases which are disrupting the system using overly litigious tactics which can be avoided. They are taking up way too much of the public’s resources says the head of the Murcia High Court.

With thousands of families looking for justice, it pays to remember how they got themselves into shady mortgages. Floor clauses had been written in to enforce a minimum interest rate on loans with floating rates. These clauses set a limit on how far they could fall together with the benchmark rate.

This meant that buyers did not get to benefit completely from the historically low interest rates. These clauses were deemed illegal by the high court in Spain in 2013.

Some families have waited 10 years to get their money back or have their case reach the court.

To avoid these situations the answer is easy. Hire a qualified mortgage broker.

The Spanish Mortgage Association ( Asociación Hipotecaria Española, AHE ) is an organisation consisting of banks, savings banks, cooperatives and credit financial institutions who have a strong presence in the mortgage industry. With approximately 80% coverage of the mortgage market, they are very prominent.

Finding an independent and impartial mortgage broker takes time and research but is vital to a trouble free property purchase.

You only have one shot to get the right mortgage. The best thing to do is to hire a mortgage broker. This is a small price to pay for a legal contract and the peace of mind that goes with it.

Some real estate agents might offer to provide these services but it’s usually best advised to find an independent broker not connected in any way that could cause a conflict of interest although some agents are no longer offering these services to win back trust in the sector.

 

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