The Court of First Instance number 8 of Tarragona has knocked down a mortgage for usury, canceling all interest to be paid. The sentence declares the “nullity of the mortgage loan contract for being a usurer”so that the borrower only has to “return the sum received without applying any ordinary interest”. This is an unusual resolution, since usury has been associated in recent times with ‘revolving’ cards, but it is much less common for its existence to be determined in a larger contract such as a mortgage. The amounts at stake are also much higher.
The sentence indicates that «the agreed interest exceeds by more than 10 points that set by the Bank of Spain for mortgage loans in 2015″ and qualifies it as “clearly notably higher than normal money and disproportionate”. Tarragona lawyer Joan Andreu Reverter, from the office that has handled the case, acknowledges that “usury on a mortgage loan is not that common”, which results in “a very radical consequence such that all interest disappears, We talk about it being a 0% loan, so you don’t have to pay more than the principal.
As much as the judge establishes the condition that the plaintiff was not a consumer but rather that professional interests had to do with the purchase of the farm (and despite the fact that the affected party was an employee), he did agree with her in terms of the usury on this loan by a society.
Lending companies
«The contract is within the framework of private capital loans. Although banks are also, here we find ourselves with a somewhat different context, because they are loans to people who have been left out of bank credit and are going to look for lending companies that are dedicated to this», exposes Reverter, which adds: “An interest is usurious when it is disproportionate in relation to the loans, and that goes for consumers and non-consumers”. Those companies often offer higher rates and often come to the rescue of people when they need liquidity.
«Society tried to justify that the interest was high because the risk was high and that had to be compared with the interest rate that was given in other cases, but I counterargued that this was true if you only have a personal guarantee, but in this case there was a real estate property as collateral, ”says Reverter.
The sentence, which is not yet final and can be appealed before the Provincial Court, adds that such high interest is not justified, “as could happen with a personal loan contract without mortgage guarantee, due to the greater risk that the lender runs as there is no real guarantee”.
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Usury has been associated with ‘revolving’ cards but is less common in mortgage loans
Therefore, that interest of more than 15% far exceeded the one that should be fixed, of 3%. The interest rate fixed in the mortgage loan contract is user because the agreed APR is 15.39%»exposes the resolution.
The operation dates from July 2015. The defendant argued “the non-usurious nature of the ordinary interest agreed by the parties» when considering that it has entered into an agreement with an entity «dedicated to financing certain high risk operations, even if there is a sufficient real guarantee, which necessarily entails a higher cost, since the risk assumed is greater». It also defended itself “pointing out that the interest rate agreed is the normal one in relation to other entities that are dedicated to the same activity of private financing”.
But none of this has served to convince the magistrate and despite the fact that, unlike what happens with other cases of financial abuse, there was no transparency problem here. “The comprehensible, clear and accessible character of the contract and its clauses is accredited, as well as the full knowledge of the same that the borrower had prior to and at the time of its formalization,” indicates the judicial resolution. A table of amortizations, of fees linked to the operation, as well as a document in which the client stated that she had been warned of the possible risks of the subscribed loan are factors to determine that, in this case, there was transparency.
The ruling therefore refers to the application of the so-called Azcárate law of 1908 (it is named after the name of the Minister of Justice of the time) or usury, indicating that “the existing jurisprudence is notable”, among others, a judgment of the Tarragona Provincial Court of April 2020 regarding usury in mortgage loan contracts. It is a rule that next month turns 114 years old. Despite its antiquity (and the fact that the very concept of usury can refer to nineteenth-century environments), it is a legislation that is not only still in force today but is also relevant in the context of banking abuses in recent years. It is not easy to establish when usury is committed. Many conditions intervene, from the circumstances of the moment to the purpose.
Usury and ‘revolving’
In recent years usury has gained relevance linked to the so-called ‘revolving’ cards. In fact, this month the Agència Catalana de Consum has sanctioned 14 financial entities with 977,813 euros for having acted abusively in the commercialization of these plastics.
As a result of an inspection campaign carried out in 2021, the Generalitat confirms that “absolutely none” of the entities analyzed “reliably complies” the rights of consumers in the clauses of the contracts or in the application of interest rates. Specifically, Consum fined six entities for applying an APR above the state average of 20%. One of them applied 29.73%.
The Secretary of Business and Competitiveness, Albert Castellanos, said that with this campaign on the ‘revolving’ “we wanted to verify the transparency in its commercialization, taking into account that it is a sector of activity of a basic nature and that we are facing a complex financial product that can generate serious problems of over-indebtedness». Castellanos stressed that “The results obtained are highly worrying. regarding the infringement of consumer rights.
For his part, the director of the Catalan Consumer Agency, Francesc Sutrias, has announced for the coming weeks “an informative and empowering campaign through social media so that consumers are aware of their rights and duties and know the possible risks of contracting credit products.
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l There are voices that warn of the risk that delinquency in families will skyrocket due to consumer loans, which are used to assume payments. “We are at a time of spending now and then we will see, derived from the pandemic, and we must be careful,” warns the Tarragona economist Rafael Muñoz.
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