Legal tip 1347.SPAIN SUPREME COURT and MULTI CURRENCY MORTGAGES
Thursday, November 26, 2015 @ 3:46 PM
BISCUIT SIX: SPAIN SUPREME COURT and MULTI CURRENCY MORTGAGES
On a Court decision dated June 2015, Supreme Court expresses this type of mortgages are a derivative financial instrument, as the quantification of the obligation of one party of the contract depends on the value of the “underlying asset”, which in these cases is a foreign currency.
Because of this “ derivative” character, lenders are under stronger information duties, as it was already expressed by a European Court of Justice Decision dated 30th of April:
"Loan agreement must set out transparently the practical operation of the mechanism of conversion of foreign currency, and the relationship between this mechanism and other provisions of the loan contract relating to the delivery of the loan, so that consumer can assess, on the basis of precise and understandable criteria, the attached economic consequences “
The statements highlight the importance of the great lack of information that the consumer suffered when they hired a multicurrency mortgage, since in almost all cases, did not know the extent of the implied due to the volatility of the currency market.
This lack of enough information can be the origin of the null character of a mortgage loan.
A cottage of Houses of Montejaque, Sierra of Ronda, Natural Park of Grazalema, Málaga, South eastern Spain