Good News on Mortgages

SPN Supreme CourtThe Spanish Supreme Court has just reversed its own findings and sentenced that the banks should have paid the costs in a mortgage transaction.

Put another way, the financing entities should pay the Stamp Duties (Impuesto de Actos Jurídicos Documentados) when taking out a mortgage, not the customer, and this decision is retroactive as far back as October 2014, meaning that mortgagors can reclaim the notarial fees etc from the financing entity (banks)… or so it seems, because the banks don’t agree.

The Supreme Court had sentenced the complete opposite just six months ago and in an unprecedented move, countermanded its own findings so that it is not the mortgagor but the mortgagee (loaning entity) who should cough up.

The ratings agency Moodys has calculated that Spanish banks will have to cough up some 4,000 million euros when mortgagors start to reclaim the money handed over in stamp duties.

In the meantime the banks are saying that the court decision only means that they will be responsible for paying the stamp duties in future mortgage loans and that they are not responsible for returning past payments.

In a joint statement the Spanish Banking Association (AEB) maintains that the sentence does not indicate any wrong doing on the part of banks (as was the case of the cláusulas suelo or ‘minimum interest rate’) and that in no case do banks keep the money received but instead hand it on to the Tax Office. In fact, if anybody has to return the money, they say, it is the Tax Office.

The Ministerio de Hacienda, on the other hand, says that they are “studying the situation.”

SPN Modelo 600 ADJIn the meantime, according to available figures from the Bank of Spain, the commercial banking sector holds 6.3m euros in active mortgages, all of which have paid their stamp duties, therefore all of them are susceptible to reclamation by the mortgagor, as long as the stamp duty was not paid before October 2014.

Stamp duties are levied by the regional government at different rates depending on the region in question, ranging from 0.5% to 1.5%. So if you take an average mortgage worth 125,000 euros, the mortgage holder had to pay between 600 and 2,000 euros. In the case of dear old Andalucia, it’s 1.5%.

But we’re also talking about notary fees, gestoría fees, etc, because from the stamp duties (tax form 600) to the notary fees, all expenses are all in the sole benefit of the banks; not person taking out the mortgage because this procedure is to protect the bank in case of foreclosure.

Anyway, this is the Gazette reporting so best you consult your accountant before breaking out the farting cushions and party balloons.

Update 13:16h: Spanish banks lost 6,000 million euros on the stock exchanges yesterday and today the trend continues.

In an attempt to clarify a situation that is still up in the air, with banks, lawyers and the Government trying to interpret the Supreme Court sentence, what has happened in that the judiciary has decided that the appearance before a notary to sign a mortgage is only in the benefit of the banks, therefore any costs derived from that are the bank’s responsibility.

The question is, have far does this go back. Without a doubt all active mortgages are affected, but it is probably the case that ones that finished after October 2014 are also affected.

(News: Spain)

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