The vast majority of them were signed between 2007 and 2008, in the months preceding the bursting of the real estate bubble and the great international financial crisis. At a time when Euribor, the interest rate used in most mortgages, was at historic highs, banks were offering some customers to pay less for their loan repayments by linking them to currencies like the yen Japanese or Swiss franc. . In the case of Banco Popular (absorbed in 2018 by Santander), this type of product has become popular with workers in a very specific sector, aviation, thanks to trade agreements concluded with unions.
Despite the fact that multi-currency mortgages ceased to be marketed in 2009, their effects still linger in court. In a judgment last May, the provincial court of Santa Cruz de Tenerife ratifies the partial cancellation of a loan in yen that Banco Popular granted in 2007 to a pilot belonging to the union of this professional group (Sepla). The award, which is now final because the time limit for appealing to the Supreme Court has expired without either of the parties having done so, obliges the mortgage to be transformed from the outset into a loan in euros and, by therefore, to return to the customer the sums unduly invoiced during all this time. “It will be more than 100,000 euros,” says his lawyer, José Luis Fernández.
The case law of the Court of Justice of the European Union and the Supreme Court on multi-currency clauses is already consolidated. They are considered void when they do not pass the transparency check. That is to say when the client does not receive “clear and understandable” information on the economic risks linked to the fluctuation of the currency to which he refers (the yen or the Swiss franc) in relation to the currency with which he pays. (euro). If, as happened, these currencies were revalued against the euro, not only did the mortgage payment increase considerably, but it also affected the capital awaiting amortization, which was constantly recalculated, so that at over the years, the customer, although he has punctually satisfied the payments, could end up owing an amount greater than that granted by the financial institution when the mortgage was set up.
In this specific case, Banco Santander (formerly Popular) opposed the consumer’s claims, arguing that he “knew the risks” linked to the multi-currency clause, that the initiative to take out this type of loan came from the applicant and that he was informed before the contract and during its term of the financial repercussions of borrowing in other currencies. In addition, he tried to justify the fulfillment of his duties of information by alleging that the plaintiff is a pilot and belongs to Sepla, a syndicate which had signed an agreement with Banco Popular for the marketing of this type of mortgage loan.
The fourth section of the Provincial Court of Santa Cruz de Tenerife clarifies that, even assuming that the client knows him, this agreement is “clearly insufficient” to justify that he knew the consequences of taking out a multi-currency loan. For the magistrates, the financial entity was not able to prove that it provided the borrower with “all the information necessary for him to know the real economic scope of the arranged loan”. No binding offer was provided, nor examples of the influence of a possible revaluation of the yen against the euro and its impact on both the amount of the deposit and the outstanding capital . “All the information is missing and this largely justifies the nullity”, he underlines.
One of the recurring arguments of the banks to defend transparency in the marketing of this type of product is that it was aimed at a part of the population with a high academic education (among the objectives were workers with stable jobs and fixed salaries) and that an average consumer might know that the payments of a loan referenced in a foreign currency can vary according to the fluctuation of the currency. However, the judgment refers to the case law of the European Court and the Supreme Court to point out that, without adequate information, the customer “cannot necessarily know” that the variation in the amount “may be so considerable that it puts jeopardize its ability to honor payments. .
The resolution affects a crucial aspect. It is not only about the increase in mortgage payments, but also about the constant recalculation of the capital awaiting amortization, of the loan debt. “It is not enough to assume that anyone requesting a loan of this nature knows that currencies fluctuate”, underlines the sentence, which also condemns the financial entity to pay the costs of the procedure.
José Luis Fernández, the Valladolid lawyer who represented the plaintiff in these proceedings, explains that this type of loan was marketed “en masse” in 2007 and 2008 “when we knew that the Euribor was no longer going to rise”. “They took advantage of it, they placed these products with those who could with bad information, they deceived everyone with these safe haven currencies”, he maintains.
The lawyer points out that in multi-currency mortgages, the capital is constantly recalculated, so there comes a time when the client “no longer knows what he has to pay”. The interest rate on these loans “depends on many variables”, from country risk to balance of payments (transactions between a country and the rest of the world). “The banks knew that with this product they were going to earn a lot more money,” explains Fernández, who believes that these cases have been won in Spanish courts thanks to the judgments of the Court of Justice of the European Union.
The lawyer also points out that apart from the sums that the financial entity will have to return for abusive charges during all these years, the client “will no longer have to pay the nonsense he paid for the maturity of the loan, he will have to pay much less for the rest of the life of the mortgage”.