Archive photo of a protest by householders over the illegal mortgage clauses. :: SUR
As if being overcharged for a mortgage were not enough, the added cost of legal fees and charges can make it almost impossible for some homeowners to enter into a legal battle to have the floor rate clause on their mortgage cancelled, especially at present with such high unemployment and the effects of the economic crisis. But would it be possible to reduce these costs by taking legal action in conjunction with other people who are affected by the same problem? The anwer is yes and, in fact, that is what many people from Malaga are doing. Not only is this a way of keeping the costs of legal action down, but they feel that as a group they can put more pressure on the authorities about the problem of floor rate mortgage clauses, which affects thousands of people all over the country.
According to lawyers and consumers’ associations, more than one thousand people in Malaga province have joined forces with others to take action against banks over the floor rate clauses, which were declared illegal by the Supreme Court in May last year. Although many bank customers are no longer subject to the clause, which meant they were unable to benefit from a drop in the Euribor rate while it was in force, they want the cancellation to be applied retroactively so they can be refunded the money they were overcharged.
Taking legal action can involve a cost of more than 4,000 euros, explains lawyer Antonio Castillo Gómez, who has just presented the first joint - but not collective - action to have been accepted by a Malaga court. “Fees and charges can amount to between 3,500 and 4,000 euros, and if you lose the case you have to pay the other party’s costs”, he points out. A collective action can only be lodged by certain groups, such as associations or Town Halls, but in a joint action several individual claims are grouped together and the costs of legal action are shared.
However, the Ausbanc delegate in Malaga, Alfredo Martínez, warns that the savings by lodging a joint action can be minimal and may not compensate for the delay which may occur in the case being heard, which could take up to two years in the event that extra information has to be collected and presented first.