Beware of defaulting on a mortgage

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09 Aug 2012 09:51 by steone Star rating in Santiago de la Riber.... 386 posts Send private message

Banks find a "short cut" which allows them to buy foreclosed properties for 1 euro
The origins of this "black hole" lie in the deeds of sale

"A legal outrage." This is how some experts have described the new way chosen by some banks to evict owners who do not pay their mortgage, something which can takes months to achieve under the present system. The new strategy uses extrajudicial auctions at notary offices to recover the properties.

It is a procedure which appears in most deeds of sale, but which has barely been used up until now. This procedure does not require the intervention of a judge and, if after two auctions for 100% and 75% of the debt, there are no bidders the banks can take back the property for only one euro, according to The Platform of Those Affected by a Mortgage (PAH).

This method has been used in only a tiny percentage of foreclosure proceedings. However, some banks have dramatically increased their use of this procedure.

"It seems that banks are not satisfied with a mortgage foreclosure procedure that allows properties to be auctioned for 60% of their assessed value while the defaulting owner and their family are ruthlessly evicted. Instead, they are becoming ever-more greedy, and some have decided to take advantage of the extrajudicial auction, which is a procedure which is even more perverse, if that is possible, than the judicial auction: it is quicker (it can be completed in three months); it leaves the affected parties completely defenceless (since it is not a judicial process, but one that is performed through a notary, they are not entitled to legal aid) and; the worst part of all is that the procedure is completed after 3 auctions. This means that if there are no bidders at the first two auctions the bank can buy the property back at a starting price of 1 euro, while the defaulting owner and their family are burdened with trying to repay the whole mortgage debt for the rest of their lives."

(Courtesy of


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09 Aug 2012 10:29 by ads Star rating. 4022 posts Send private message

Might this be deemed an abusive clause, as quite some time ago (2007) Maria identified the following

Provision 10 bis.1 of Law 44/2006 affirms:

“It will be considered as abusive clauses all those which have not been individually negotiated and all those practices which have not been expressly agreed and that, against the standards of the good faith, produce, to the detriment of the consumer, an important imbalance between rights and obligations of the contract parties (…)”

The consequence for an abusive clause are the same: null and void  ipso iure, and they will be omitted in the contract and considered as inexistent.

The Administration can demand the offender to compensate the consumer.


This relates to real estate contracts but might this apply also to mortgage contracts?



This message was last edited by ads on 09/08/2012.

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09 Aug 2012 14:58 by steone Star rating in Santiago de la Riber.... 386 posts Send private message

Thanks for your response ads. What these Lawyers are saying is that the banks might have found a way to get round the Law by enacting a part of the contract/mortgage which was obviously signed by both the lender and the borrower. It just stinks of the underhanded way the Spanish banks might/will act.  I am not a lawyer however my reading of your posting looks like it is to do with the onset of the mortgage and not when the borrower is  in default. Maybe at some stage a qualified Spanish lawyer can comment on what appears to be theft but by another name.

From the same Law Firm they have said that one can buy a house now for just €100 p/m. A €50,000 repo can get a 40 year mortgage for that amount! The mind boggles!!!!!!!!


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09 Aug 2012 16:38 by I_Love_Javea Star rating in Gibraltar / Morocco .... 125 posts Send private message

 Extract (not your post) looks like SPAM to me, trying to scare potential customers who are already in the mire to seek fee paying advice (not a bad idea in its self, maybe if they had sought some decent honest advice in the first place they would not be in the brown stuff now). But this sort of thing is like ambulance chasing in my book.

This is old news and keeps appearing in expat forums I wonder why?

This is not making headlines in the Spanish press which I read every day.



Shiny happy people - where?

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09 Aug 2012 17:23 by Woodbug Star rating. 371 posts Send private message


It is well documented that the banks and their management are nothing more than licensed thieves who show no compunction for their actions and daily demonstrate gross stupidity, greed and incompetence.
Here is a tale that may bring a crumb of satisfaction to those who have suffered at the hands of the bandit banks. Around late 1990 the UK was in the grip of a recession and a business acquaintance at the time, had purchased an empty run-down factory unit in 1987 with the aid of a commercial bank mortgage and spent some time and money repairing and restoring the unit.
In 1990 he suffered massive losses when 2 large customers went into liquidation and forced his business to close as a result.
He was a printer and after selling off his equipment, and not wishing to default on his mortgage, he found a tenant to take the unit on a 5 year lease as a storage unit, in return of a rental almost double his monthly re-payment obligation to his bank.
He presented the plan to his commercial bank manager and was told that that the mortgage he had accepted was not an investment or by to let arrangement and he wouldn’t be permitted to lease the premises to a third party. Clearly he was stumped, he couldn’t rent the building, they refused to change the mortgage status and with absence of income, he couldn’t re-mortgage elsewhere.
After some months, the bank foreclosed and ‘penalties’ kicked in and by 1992 he ‘owed’ the bank almost double his original loan  (At this time the base interest rate had gone up to 15% under Gordon Lamonts stewardship).
Suddenly, out of the blue he received a letter from the bank to say that they had found a buyer for the unit and a complicated statement revealed that he would still owe the bank more than his original loan. It came to his attention that the factory had been badly vandalized and he consulted an eminent Manchester lawyer who discovered that the bank had not insured the building and therefore had not exercised a duty of care to their clients.
The upshot of all this was that the bank quietly wiped out the loan and the ownership of the factory was restored to my friend, without prejudice, press ban……..  blah – blah!
Within days he was approached by a petrol company who offered him a considerable sum to purchase the site, the occupants of the two houses either side of the factory, were given new homes purchased by the petrol company and the site (factory and two houses) was converted to a large 24 hour filling station.
For those in distress – it’s worth looking at all angles to play the banks at their own game!

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