Windtalker 

The 5 year deal was no doubt negotiated before repossession hence the previous owner pocketed the 5 year rent with a pretty tight contract, believe me we had a few on our Community.

We also have problems with a very antisocial tenant who ignores many of the Community rules but it appears his landlord, a Bank who repossessed the apartment is also not receiving the due rent and appears to be finding it difficult to evict them.

The Law has come down very much in favour of supposedly hard done by tenants NOT banks as unhappy owners.

I was considering the point windtalker made Kavanagh.  

If a purchaser takes out a mortgage, the provider of the funds will protect their interests by making conditions that the mortgage holder will live there as their main residence.   If any tenancies are created that’s an arrangement between the mortgage holder and the tenant, if it isn’t declared or has any permission of the mortgage provider, the contract is broken isn’t it.

Surely the person holding the mortgage has to comply with the contract they signed with the bank, if the bank disallows tenancies in the contract then the tenant doesn’t have Safe rights to stay, it seems!

Brian

Maria thinks not. Yes, maybe the bank can reposes but they may become heir to the tenants and their ´long-term´ contract (Contrata de Vivienda) of the property.

How are the tenants suppose to know about clauses in the landlords mortgage contract?.

Would a Spanish judge consent to an eviction and make them homeless?.

Knowing the scruples of the Spanish banks ,they will probably send minders to evict and break the legs of any tenants ?

I agree with that windtalker, there will be restrictions and they can likely evict lawfully.  

I would have thought that the Spanish Banks would have  clauses...in the mortgage contract...the same as the UK Banking industry has ....for instance  you would need written  permission from the Bank to sub let ....I doubt very much if any Bank's ...especially the ones in Spain would agree to you subletting with a five year contract for obvious reasons.

I would have thought that the Spanish Banks would have  clauses...in the mortgage contract...the same as the UK Banking industry has ....for instance  you would need written  permission from the Bank to sub let ....I doubt very much if any Bank's ...especially the ones in Spain would agree to you subletting with a five year contract for obvious reasons.

Sounds like a win win for the previous owner who received rent in advance and did not pay the Bank mortgage.

A win win for the tenant who has a contract and can’t be moved.

Bad news for the Bank who can’t easily sell with sitting tenant.

Possibly bad news for neighbours and Community IF the tenant decides not to follow Community rules.

Bank needs to respect the current rental contract in that case

In a bank repossession court application, what is the legal rights of a family with children who have a ´long-term´ contract (Contrata de Vivienda) of the property. The tenant has a contract for five years and can always extend by a further 1 year. They have always paid their rent on time to the owner.

Going deeper into this matter of sale of mortgage contracts to  vulture funds:

An action by which you

(1) ask the nullity of the clause by which you renounced to notification of the sale/cession,together with other abusive clauses ( floor clause, expenses, anticipated maturity...) and

(2) request information on  the value your mortgage loan contract was sold for for the sake of exercising your legitimate rights to re-purchase of that debt is possible.

In many ocassions sale price is even  lower than  5% of the amount it was lended to you.

Contact us if you need more info on this

For those struggling with interest-only mortgages or under the threat from repossessions can I suggest that you see the thread titled

"Steps for Claims on Floor Clauses in Mortgage contracts" https://www.eyeonspain.com/forums/posts-long-22680.aspx

as there's some great practical advice being given re claiming refunds and re-negotiating options with the Banks.

Good luck to all.

Good point Markfish with regard to the benefits of more flexible mortgage arrangements. 

Where you observed the following, I wonder is this the norm with Banks in Spain?

" As interest rates decreased, it would have been easier for us to keep paying the same amount to the lender, with the overpayment being used to decrease the capital, but my lender wouldn't hear of us doing such a thing."

Seems very short sighted not to allow this option given the increase in repossessions.

Spanish financial institutions could be a little more flexible in the administration of the products they offer. Overpaying a UK mortgage with no penalty has been a thing for the last 20 years or so. Spanish lenders seem to shy away from from this, and making a large payment seems to have red tape involved at all levels (I believe it is a change of terms, therefore must be notarised, or have I been lead up the garden path?). As interest rates decreased, it would have been easier for us to keep paying the same amount to the lender, with the overpayment being used to decrease the capital, but my lender wouldn't hear of us doing such a thing. We therefore (stupidly) allocated it elsewhere and that overpayment is not now readily available. Our situation is maybe different from the OP's because we have purchased a 30 year mortgage with 10 year interest only, so the repayments were outlined at the outset. That said, the lender is now "trying" to be a bit more flexible in their repayment structure as they now allow payments in excess of 5000€ to be made with no penalty. 

Also had a recent valuation from a local (reliable) agent we know and have been friends with for many years, and although prices are rising, we are still in negative equity of around 50% of purchase price, a lot less in reality if we want to sell.

I know we made mistakes in the purchase process and I know our circumstances have changed, I don't blame anyone except me. That said, it doesn't make me stupid, greedy, ignorant or any of the terms that have been bandied around about people in similar situations. Wishful thinking maybe? Every situation is different, similar maybe, but different.

Mark.

Yes it does sound familiar Ads.   

The strange thing is though, if you buy a car on pcp the manufacturer gives you extra discount as a contribution and if you then pay the loan up within 14 days cooling off, you only pay peanut interest for a few days but keep the extra discount/contribution of the manufacturer.   

Every cloud as they say!!

The same thing appears to have happened with car purchase financing in the UK with the prevalence of PCP loan schemes.

Whatever happened to the option to have a repayment scheme where purchasers were paying off their car loan each month, for a set term, as opposed to a scheme which encourages an accumulation of debt?

An informative article worth reading ( the Guardian June 2017) identifies some uncomfortable realities ( and similarities to interest only mortgages). Check it out as it's quote an eye opener.

https://www.theguardian.com/business/2017/jun/10/car-loans-personal-contract-plans-vehicle-financial-crisis-pcp

“the industry’s growing reliance on PCP has made it more vulnerable to macroeconomic downturns”......

“PCP car finance relies on the lenders’ ability to realise guaranteed future values, which can only happen in a strong used car market; but if hundreds of thousands of diesel drivers were to use consumer law to return their PCP-financed cars early – passing the early-termination losses back to the lenders – the cost would be so great that many finance companies wouldn’t be able to cope. It’s no exaggeration to speculate whether this could become the next financial crisis,”

Sound similar?
 

Interest only mortgages became a good product when the mortgagee invested in a product that could perform better than the interest they paid to the bank.   The bank used to insist an investment was in place to protect their investment and payment term.  

It went pear shaped when the same financial institutions sold very dodgy endowments.    

Since then the interest only mortgage is hijacked by landlords who have enough capital to buy a portion of a house.  

When exactly did a house become such a disrespected commodity?    Funny old game innit.  

Exactly why Windtaker we need to closely examine the reasons and background circumstances from a far wider perspective, to comprehend ALL the factors that  have led to repossessions in Spain and the proliferation of such a risky product that appears to have contributed to such a dire outcome.  

But we all need to do so with open minds and a willingness to strive for effective solutions that will benefit and better protect all in the longer term.

To point fingers without reviewing the whole, or  be tempted to make generalised assumptions does not solve the problem.

We need to debate various options on forums such as EOS ( preferably without personalising 😉) and try to persuade those in Spain who demonstrate equal concern to be as proactive as possible.

Hence my plea to the legal fraternity to use the reporting mechanisms in place to protect and endeavour to effect reform with greater accountability of the powerful financial institutions in that process.

Hugh, 

Just seen your post and  I can relate to your observations, but we have to have faith in those with sincere intent and intellectual capacity, to improve the status quo. Those from within who are also striving for well overdue change.

Sadly these things take time but given sufficient momentum and comprehension and BELIEF in their ability to gain reform, I still retain hope. 

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Surely there must be a better way than the current system which almost encourages "head in sand" mentatlity on the part of the interest-only mortgagee, and abusive greedy mentality on the part of the financial provider or agent who may have little interest in ethical considerations or the impact on the wider economy.

Isn’t the head in sand mentality just typical of Spain? Where banks are more immoral than almost anywhere else.

What makes you all think that the original poster ..has not lived in the property for the last 10 years at €122 per month ...why else would they be worried about the bank repossession taking place now ...if they did live in it themselves they would only be doing what thousands of people are doing all over Spain.. Just like the stupid people next door to me done ...they bought on interest only for 10 years in the hope that the property would rise in value ...to cover the short fall  I know of several case's that has involved bank repossession and it involved interest only mortgages.