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Portalegre Mortgage ruling
-
shanagarry
- CVO Legend
- Posts: 2048
- Joined: Tue Jul 27, 2004 7:26 pm
- Location: Craigweil-on-Sea
Portalegre Mortgage ruling
Has anybody been following this case?
Having had a conversation with my lawyer earlier today on a totally unrelated matter she showed me a newspaper article (even though I couldn't read it) explaining the magnitude of the reported judgement handed down by the court and suggesting the serious ramifications of this case for Mortgagors who have financed property under Portuguese law.
For those that don't know - there has been a recent case in Portalegre, where Espirito Santo Bank pursued a borrower through the courts after he defaulted on his mortgage, for the outstanding interest on the loan (€46,356) - even though he had handed the property back. The court found in favour of the defaulter saying that handing back the property was sufficient for the bank to cover its costs - calling their action 'unjust enrichment'. The judgement is being reviewed by a number of government bodies with a view to passing it into law.
If this passes into law and a property is 'owned' by a borrower with little or no equity in the property who is struggling to service mortgage payments - there's likely to be a rush for the door in some quarters. I asked my bank manager what he made of it and he suggested that some banks will start to issue amended documents in the coming months to try and head off the possibility of an exodus. He wasn't very hopeful that many will be returned signed. Can you imagine the furore this will cause - if the tolls debacle is anything to go by.
How many expat mortgagees in The Algarve would relish the thought of this coming to pass
Having had a conversation with my lawyer earlier today on a totally unrelated matter she showed me a newspaper article (even though I couldn't read it) explaining the magnitude of the reported judgement handed down by the court and suggesting the serious ramifications of this case for Mortgagors who have financed property under Portuguese law.
For those that don't know - there has been a recent case in Portalegre, where Espirito Santo Bank pursued a borrower through the courts after he defaulted on his mortgage, for the outstanding interest on the loan (€46,356) - even though he had handed the property back. The court found in favour of the defaulter saying that handing back the property was sufficient for the bank to cover its costs - calling their action 'unjust enrichment'. The judgement is being reviewed by a number of government bodies with a view to passing it into law.
If this passes into law and a property is 'owned' by a borrower with little or no equity in the property who is struggling to service mortgage payments - there's likely to be a rush for the door in some quarters. I asked my bank manager what he made of it and he suggested that some banks will start to issue amended documents in the coming months to try and head off the possibility of an exodus. He wasn't very hopeful that many will be returned signed. Can you imagine the furore this will cause - if the tolls debacle is anything to go by.
How many expat mortgagees in The Algarve would relish the thought of this coming to pass
Re: Portalegre Mortgage ruling
I think the banks have been abusing mortgagees recently and the change to the law will ultimately be good for the consumer. I have heard the banks are completely incompetent when it comes to trying to workout loans. This change might also be better for the market, as banks will not be as interested in flooding the market with highly discounted properties (repossess a property, sell it at a discount to cover some of the mortgage and then pursue the mortgagee for the balance).