From One Scam to Another: How Banks in Spain Intend to ‘Compensate’ 1.4 Million Fleeced Homeowners

‘Poisoned offers’ to settle, backed by the government.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
Spain’s biggest banks, it seems, will never learn – not even when the highest court of the land, the European Court of Justice (ECJ), rules against their dodgy practices.
The ECJ ruled just before Christmas that Spain’s major banks would have to refund all the billions of euros they had surreptitiously overcharged borrowers as a result of the so-called ‘mortgage floor-clauses’ that were unleashed across the whole home mortgage sector in 2009 [A Nightmare Before Christmas for Spanish Banks].
These floor clauses set a minimum interest rate, typically of between 3% and 4.5%, for variable-rate mortgages, which are a very common mortgage in Spain, even if the Euribor dropped far below that figure. In other words, the mortgages were only really variable in one direction: upwards! While this is not illegal, most banks failed to properly inform their customers that the mortgage contract included such a clause.

This post was published at Wolf Street by Don Quijones ‘ Jan 14, 2017.