Esquerra Republicana de Catalunya (ERC) asks the Government for legal reform to protect those affected by the sale of mortgages to investment funds, a practice that, according to the group, has left thousands of families defenseless. The Catalan party’s proposal comes just when the Constitutional Court has confirmed through a ruling that the banks must be responsible for assuming the legal costs in the event that someone affected by abusive mortgage clauses wins a trial on this. A complete blow to the banks that have played fraudulently with the mortgages of thousands of people.
The initiative has come through a non-law proposal (PNL) registered in Congress and in a parallel proposal in Barcelona City Council. The objective, according to the Republicans, is to “stand up to speculation with mortgages and guarantee effective rights for affected families,” in a context in which financial entities have transferred mortgage portfolios and loans with strong discounts to third parties without offering that same possibility to debtors.
It’s official: the Constitutional Court confirms that banks must pay legal costs when a consumer wins due to abusive mortgage clauses
CaixaBank suffers a new setback from the Supreme Court: it will have to return more than 1,392.64 euros for the abusive clauses of a mortgage signed in 1999
A practice that has spread after the financial crisis
The sale of mortgage loans to opportunistic funds was consolidated after the 2008 financial crisis, when banks sought to clean their balance sheets of problematic assets. These operations are usually carried out with significant discounts, but the original debtor does not have access to these conditions, which has generated recurring criticism from social organizations and platforms for the right to housing.
For ERC, this is important enough to focus the debate since the current legal framework favors “opacity, defenselessness and the violation of rights”, leaving vulnerable families, the elderly, guarantors and heirs in a disadvantaged situation. Representative Etna Estrems has described it as “socially unjustifiable” that the funds buy discounted mortgages while families cannot pay off their debt on equivalent terms.
Lack of transparency and lack of protection
One of the main problems detected is the lack of information. Many families do not know who is the real owner of their debt after the assignment, which makes any negotiation difficult. The ERC councilor in Barcelona, Eva Baró, has denounced that this situation is “incompatible with the right to housing.”
The training maintains that this practice has generated “opacity, defenselessness and violation of rights”, especially among vulnerable groups such as older people, guarantors or heirs.
Right of first refusal and debt cancellation
The ERC proposal involves reforming the Civil Code, mortgage regulations and consumer legislation to introduce an effective right of first refusal, withdrawal and redemption. That is, the debtor can cancel his mortgage under the same conditions in which it was sold to a third party.
Among the concrete measures, the Republicans propose:
- Guarantee total transparency in assignments, including the sale price of the credit.
- Establish a minimum period of 60 days for the debtor to exercise their right to cancel the debt.
- Prevent a foreclosure from continuing if the assignment has not been properly reported.
- Create a public registry that allows tracking the traceability of credits.
Furthermore, they propose that, in the event of non-compliance with these obligations, the debt can be extinguished for the same acquisition price plus legal expenses and interest, a measure that would mean a significant change in the position of the debtors vis-à-vis the funds.
Institutional pressure at various levels
ERC’s political offensive will not be limited to its action in Congress, but the municipal group in Barcelona has also taken action by launching an initiative to obtain the support of institutions such as the Bank of Spain or the CNMV, as well as municipal entities and social platforms.
The proposal comes in the middle of the housing crisis, with real estate prices setting records and an increasing participation of institutional investors. The eventual reform proposed by ERC would open a new regulatory front on the activity of funds in the mortgage market, with both legal and economic implications.