Thousands of people in Spain are suffering from the cruel experience of having the banks repossess their homes and yet are still stuck with repaying the bank for the entire sum borrowed. In this News Plus we’ll meet a man who fought back. He sued the bank and the case went all the way to the European Court of Justice.
First, here’s his story; then we’ll talk to a judge:
There is something special about Mohamed Aziz. The same thing that has happened to many thousands of other people in Spain happened to him. But he is fighting it. He lost his job in 2009, and then the home he had bought near Barcelona six years before with a bank loan of 126,000 euros. In 2011, the savings bank had him evicted because he was four months behind with his payments.
Since then he and his wife and their three children have been living in a subsidised apartment where the rent is 270 euros per month.
Aziz said: “I spoke with my lawyer Dionisio’s father, who has since died. He told his son, and we started looking for a way forward. That’s how we got this far.”
Mohamed refused to give up. Because he put up a fight, the European Court of Justice ruled against the Spanish eviction law. Other judges can now refer to that ruling and pre-empt or suspend other evictions. Lawyer Dionisio Moreno has always been ready to defend the underdog. This time it was like David against Goliath.
Moreno said: “Mohamed came to me with a friend of his to explain his problem, being late paying the bank back. We tried to negotiate an agreement with the bank but they refused and went ahead with the eviction.”
So Moreno took the bank to the trade court with a complaint that it had infringed the abuse clause against his client. The conversation, he tells us, went something like this:
Moreno said: “When we showed up, the banker said: ‘Oh, so you came?’ And I told him: ‘Yes’. And he said: ‘But we’ve already repossessed your client’s house’. And I told him: ‘Well, listen, he has a stuborn lawyer and we’re going to keep on coming.’ ‘But who’s going to pay your fees?’ he asked. And I told him: ‘My father, may he rest in peace, gave me this case, and I’m not going to drop it.’”
In fact, he took the case all the way to the European Court in Luxembourg, which said Spanish law didn’t conform to a 1993 European Directive on consumer protection. The struggle took two and a half years. The ruling came on 13 March.
Moreno said: “At first we couldn’t open the document file sent from the court, giving its decision. But we managed in the end. I skipped straight to the verdict and found we’d won!”
Dionisio and Mohamed have won a first battle, but won’t rest there. They’re holding out for the ultimate victory of getting the repossessed apartment back from the bank.
Beatriz Beiras, euronews: “We now turn to the third protagonist of this story, Judge José María Fernández Seijo, in Barcelona. You are a judge at Barcelona’s business court, where Mr Mohamed Aziz brought a complaint against Catalonia Caixa Bank for abuse of his mortgage agreement, and he is asking for his eviction notice to be annulled. Why did you refer this case to the European Court of Justice?”
José María Fernández Seijo: “Fundamentally, I did it because of the Spanish system of evictions which leads us to believe it is unfair, and that the consumer cannot adequately defend himself in the face of an eviction order.”
euronews: “On 14 March, the European Court of Justice ruled in Mr Aziz’s favour. What are the practical considerations for him, having already lost his home?”
Fernández Seijo: “The effect for him is he is going to have to study – at the court which received his complaint against the bank – if his loan came with abuse clauses or not, and whether he was correctly dispossessed and evicted from his home.”
euronews: “The rate of evictions in Spain is dramatic. What’s going to change, starting now, for the people affected, and what’s going to change in the future when someone applies for a housing loan in Spain?”
Fernández Seijo: “Spain delayed transcribing the European Directive on consumer protection for 20 years, so what’s going to happen first is that judges will have more scope to revise eviction procedures, and will be obliged to remove clauses, conditions, which are abusive, concerning interest rates and the unguaranteed variable rate clause and contract signing conditions. When the reform of the law is approved, consumers will have a substantially different environment, since Spain’s case is unique in Europe.”
euronews: “What’s the unguaranteed variable rate clause?”
Fernández Seijo: “Those are clauses the bank uses to guarantee itself a fixed interest rate on repayment, even if interest rates drop. With this, even if the Euro Interbank Offered Rate Euribor goes to 1%, the bank guarantees that its interest will be above 4.5% or 5%. The Supreme Court of Spain a few weeks ago ruled that those clauses at one financial establishment were void and must be abolished.”
euronews: “To conclude, as a judge, what is your feeling towards the European Court of Justice’s ruling, contradicting Spanish legislation, and is it true that Spain’s law on mortgages dates from 1909?”
Fernández Seijo: “The mortgage law is from 1909, but the problem is that the evictions law is from 2000. It’s sad, but in 2000, when the Civil Code was reformed it was not adapted in conformity with European rules. Another point is that, as a Spanish judge, I am very satisfied that a European tribunal has laid down rules that can be enforced, not only in Spain, but throughout the EU. I think the European Court helps make us all more confident in a Europe of solidarity and a Europe in which the interests of consumers are defended.”