The Supreme sets doctrine on mortgage loans

The mess of mortgage expenses continues to add chapters. While it is expected that the Mortgage Law will take effect in March, the Civil Chamber of the Supreme Court has now ruled that the notary and administrative expenses of the constitution of the mortgage must be distributed in half between the financial entity and the client. In addition, it says that the cost of registering the mortgage in the registry must be posted by the bank and the cancellation of the client.

The Supreme Court has also pointed out that the opening commission on mortgage loans is not abusive and that banks will only have to inform the client of this amount as clearly as possible as well as indicate it in their mortgage offers.

The decision of the high court contradicts to some extent the Mortgage Law that is waiting to be approved by the Senate and published in the BOE so that it enters into force next March. The standard approved in December attributes all mortgage expenses to financial institutions except appraisal.

“It’s possible that banks will return this money directly to clients and not have to start new legal proceedings against entities for mortgage issues,” says Nancy Lourdes of Maher Abogados.

 

How is the new distribution of expenses, according to the Supreme

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Regarding the notarial expenses, the Chamber states that ‘the notarial intervention interests both parties, the costs of the mortgage loan deed matrix must be distributed in half’. This same solution offers for the deed of modification of a mortgage loan, ‘since both parties are interested in the modification or novation’. The Supreme Court also imposes payment on half of the management expenses.

As for the cancellation of the mortgage, the Supreme Court emphasizes that “the person interested in the release of the lien is the borrower, for which this expense corresponds; and copies of the different notarial deeds related to the mortgage loan must be paid by those who request them ”.

 

What about the new mortgages and those already signed?

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The new sentence opens the possibility that those mortgaged to date can claim half of some of their mortgage expenses to the financial entity with which they signed the loan. “This claim can be made without a deadline as long as it is sued under the premise of abusive payment,” says Nancy Lourdes. However, “the mortgages that are signed as of tomorrow will already pay half of these expenses,” says the lawyer of Maher Abogados.

 

A practical example

home loan

From Maher Abogados they give us an example; For a mortgage of 150,000 dollars for a second-hand house signed in 2014 with an opening commission of 0.5%, the expenses that the customer had to pay were 2,875 dollars and were divided in this way:

  • AJD: 1,350
  • Notary: 600
  • Registration: 360
  • Pricing: 315
  • Agency: 250

Now with the Supreme Court ruling, this client could claim 125 dollars from the bank, 360 from the registry and 300 from the notary, or a total of 785 dollars from his bank.

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