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Round Up of Equity Release Decisions
ERVA has compiled a list of known Equity Release Court rulings. The Courts have all found in favour of the victims and ordered the mortgage loans to be removed or have rendered the foreclosure proceedings invalid. In most, the Courts have opted to resolve the dispute by ordering a “restitution of benefits”, which means that each party should be returning what they took under the contract: the bank is made responsible to pay the interest and cover the investment losses, and the borrower is to return the sums paid to them at the outset.
In one case, the Court refused the bank the right to claim back the initial payment.
Some of these cases are under appeal and could be reversed although, we strongly believe it to be unlikely under the the prevailing mood against defrauding banks and bankers for their known misdeeds and mischief.
Landsbanki Luxembourg S.A. Vs. Borrowers. 25th April 2015 in Court of First Instance 8 of Marbella
The court invalidates the foreclosure proceedings against the borrowers and terminates the case on grounds that the lender Landsbanki Luxembourg S.A. had grossly failed to file the adequate documentation alongside the foreclosure petition.
As a result, the bank is barred from filing foreclosure proceedings against this borrower for good.
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2 Claimants Vs. Danske Bank International S.A. 31st of March 2015, in Court of First Instance 2 in Benidorm
According to the Court, it is proven that we are before a contract known as “Equity Release”, named as “Home Income Plan” for retired people where the bank grants a loan that it is invested either directly or via a third party, retaining the lender a pledge over the investment, with a view to obtain sufficient income to finance the loan and hopefully, an excess that will supplement the customer’s pension.
The customers only received part of the loan, the balance being kept under control of the bank and later being invested through complex financial products, retaining the lender a pledge.
Court determines the nullity and voidness of an equity release mortgage loan on grounds that the clients had no financial or investment knowledge, professional or commercial experience, investment expertise nor sufficient academic training to understand, not even superficially, the financial product offered by the bank. It was also proven that the clients had not ability to select and validly carry out the investments in financial products as those where the loan was invested.
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2 Claimants Vs. N.M. Rothschild & Sons Ltd. 7th of November 2016
The Court rejects the allegation by the defendant that this is a simple and ordinary mortgage loan because the loan’s destination is predetermined, from the outset, to be invested in a complex investment fund. It is therefore a complex product that includes, inter alia, a loan that is conditional upon the following: the mortgage, the specifications in respect to the drawdowns and the pledge of the investment fund. It is therefore not possible to separate or demarcate the mortgage loan from the destination to be given to the capital.
The Notary that intervened in the mortgage loan was deposed in Court and he affirmed the complexity of the product.
The Court rules that the product does not adapt to the profile nor needs of the claimants i.e. retired pensioners that do not need to make any investment but resort to signing this contract because of the fear instilled in them of announced spectacular and horrific Inheritance Tax.
Neither claimant required this product at this point in their lives, as they owned unencumbered property with a stable financial situation.
The Court orders the Equity Release contracts null and void and orders restitution of benefits.
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1 Claimant Vs Surrenda Link Mortgage Funding Nº 1 (SLM). 2nd of May 2017 in Court of First Instance 3 in Vera.
The Court determines that the Equity Release mortgage is null and void on grounds that it consisted of a complex product, that the claimants had no previous investment experience, academic education to understand the product they were purchasing nor there was any evidence that the claimants had ever in their life invested in financial products. It is also established that the claimants had not “investors profile”, not even conservative.
As a result, it is ruled that the bank breached the applicable laws in the matter and the equity release mortgage loan is declared void, ordering a mutual restitution of benefits.
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2 Claimants Vs. Landsbanki Luxembourg S.A. 7th of February 2017 in Court of First Instance 4 in Fuengirola.
The Court determines that the product SITRA II (made up of a loan, a mortgage, an investment and a pledge) is a complex financial instrument whose effects depend, largely, on market values of impossible determination in the contracts, which are usually redacted in abstract terminology, and therefore only accessible to experienced people.
According to the ruling, the neither the defendant nor its agent O.M.M. made any attempt to ensure that a) the profile of the claimants was adequate to the product and they understood the complexities nor b) whether the information provided was clear, concise and transparent.
It is also added that at source, the documentation given to the clients was fraudulent at worst, negligent at best, and because of this the equity release is declared null and void, ordering the mortgage loan to be cancelled and the advance payment retained by the claimant in concept of damages.
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2 Claimants Vs. Landsbanki Luxembourg S.A. 11 of December 2014 in Court of First Instance 8 in Marbella
The Court determines that the equity release mortgage loan documentation given by the bank to the customers does not allow for an understanding of the product. None of the documents includes clear, concise, detailed or relevant information in respect to the functioning of the product or its financial consequences.
The complexity of the product resides in destining a large part of the mortgage loan to sign up a unit linked life insurance product that is made up of an investment fund. The information provided was manifestly insufficient.
The reality is that not even the bank provides a plausible explanation in respect to how does the investment of the loan through financial products work.
Because of these complexities, the bank should have carried out actions to ensure that the client knew exactly the different possible scenarios and consequences.
The Court determines that the bank misrepresented the real complexity of the product and therefore concludes that the client was unable to understand and accept the product validly, for which reason they decide to nullify the mortgage loan, with restitution of benefits.
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2 Claimants Vs Surrenda Link Mortgage Funding Nº 1 (SLM). 29th of October 2014 in Court of First Instance 3 in Torrevieja (Alicante)
The Court determines that the customers were classed as ‘retail’ and that, as a result, they should have been provided extensive and detailed information on different scenarios of investment performance, associated risks, ensuring that the product was suitable and that it was clearly understood by the customer.
The Court nullifies the mortgage loan and orders the lender to pay 40,000 Euros in damages.
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17 Claimants Vs. Surrenda Link Mortgage Funding Nº 1 (SLM). 30 of November in Court of First Instance 11 of Bilbao
Court of First Instance 11 in Bilbao has ruled that twelve mortgage loans valued at 6 million Euros, granted to British families mostly in the Malaga province between 2004 and 2007, should be declared void.
The Court dealt with this case as all loans were granted at a Bilbao Notary Public and the representatives of the lender, SL Mortgage Funding nº1 Limited (SLMF), were also based in the Basque city, according to Lawbird Legal Services S.L.P.
These loans were sold to attain a reduction in potential inheritance tax, since the mortgage would reduce the taxable value of the property, but also to supplement the modest pensions received by the owners of the properties.
Chester-based SL Mortgage Funding nº1 Limited (SLMF) had not applied for the necessary regulatory permits to legally raise funds from the public and provide an investment service, activities reserved and regulated by the Bank of Spain and the CNMV (financial regulator).
Despite not having any of the above authorizations, SLMF would lend but at the same time retain most of the proceeds of the loan, which would then be invested by them.
The ruling declares that “infringing the protocols set by the relevant administrative authority to supervise the disputed product is a regulatory violation that exceeds that of a mere breach of banking laws, such as misselling, so profusely dealt with recently in relation to the massive sale of complex financial products.”
The Judge held that in this case, the breach of public policy “is far more serious for it makes a mockery of a whole system of financial and banking supervision designed to prevent abuses to consumers and protect the stability of the sector”, and likens this behaviour “civil fraud”, which is any proposal that contravenes mandatory regulations or has a false or forbidden reason.
The sale of this product was conducted via commission-earning financial advisory firms, namely David Driver from OIB, Hamiltons Financial Services and Henry Woods Investment Management, based in Estepona, Marbella and Fuengirola.
SLMF also recommended a network of lawyers that created an appearance of seriousness, downplaying the extent of the lack of licensing requirements of the bank and the product.
According to Lawbird Legal Services S.L.P., for the claimants, the ruling confirms that operating in breach of mandatory banking and financial regulations makes the suspect a “boiler room”, -even if the company was legally operating in their own country- and allows the victims to rid themselves of a nightmare lasting for over 10 years.
The Judge concludes that the nullity and voidness should be made applicable to all contracts and agreements executed between the clients and the bank, applying the laws of contractual termination in odd fashion –albeit most favourable- as clients “will be able to claim what consideration they gave under the contract without having to return was given to them.”
SLM Decision Still not Official
Having the Appeal Court notified the parties that by the end of June they would have resolved the appeal to the Equity Release “Bilbao case” ruling, it is almost October and there is no official notification.
This is not unusual and should not be interpreted in any particular sense.
We eagerly and optimistically await the decision from the Court.
Bilbao Appeal Court to deliver a decision on 17/6/2017
A decision by the The Appeal Court in Bilbao in respect to the nullity and voidness of the SLM mortgages has been announced for the 17th of June 2017, a record time by regular Court standards. For this reason, the Court of First Instance has halted enforcement proceedings given the closeness of this date.
The date of the ruling rarely coincide with it being made public, and it can take weeks for lawyers to be formally notified.
This will announce the verdict as soon as it is received.
Bilbao Court Issues Broad Enforcement Proceedings Against Surrenda Link Mortgage Funding
Court of First Instance 11 in Bilbao has accepted a motion by claimants to enforce proceedings against SLM and ordered the following:
- The freezing of assets owned by SLM to cover as much as 6,262,574 Euros, plus legal interest.
- The cancellation of mortgages registered in favour of SLM on the properties owed by the claimants, by ordering the Land Registries of Alora, Mijas, Javea, San Roque, Estepona, Coin, Velez-Malaga and Marbella to remove same.
- The annotation of the Court ruling in the indicated land registries.
This groundbreaking Equity Release ruling applies in full art. 1306 of the Civil Code (reserved for serious law breaches and violations of public order) and orders the defendant SLM to not only suffer losing the rights of a registered mortgage but, in addition, to pay the claimants the loan that was withheld to invest with Premier Group Isle of Man (now in liquidation).
SLM does not have the right to appeal but can oppose this decision, within 5 days.
The above decisions are adopted provisionally, pending the outcome of the appeal process. As with most rulings, claimants are by law entitled to enjoy the result of a favourable ruling on the understanding that, should the ruling be reversed on appeal, the successful appellant may request a restitution of the gains received.
Currently, only 20% of rulings are overturned by Appeal Courts.
Rothschild Loses Equity Release Case in Spanish Courts
International Property Finance Spain Limited (“IPFSL”), an unregulated corporate ramification of sinister N.M. Rothschild & Sons, is the next entity on the long list of Equity Release providers whose contracts have been declared null and void by Spanish Courts.
In a very elaborate recent ruling, the Courts have found in respect to Rothschild and IPFSL that their allegations cannot be upheld, for the following reasons:
- The Credit Select Series 4 loan is a leveraged product classified as complex, for it is always used to invest in the financial markets. The loan is always linked to an investment that is pledged on behalf of the lender.
- This product was presented as a means to avoid the devastating effects of the Spanish Inheritance Tax, presented as a voracious levy, by mitigating or even neutralizing its consequences.
- The Credit Select Series 4 loan, sold through Hamiltons Financial Services, was offered by Rothschild -presenting itself as originating in a family of prestigious aristocratic lineage and noble descent- and meant the remedy for the very concerning issue of the Spanish Inheritance Tax.
- Hamiltons Financial Services intervened as intermediary and advisor, always on behalf of International Property Finance Spain Limited who in turn, operated as an Investment Services Company (ESI) on behalf of Rothschild. This conclusion is arrived at -despite not being any contract linking both companies- because whether contractually linked or being a free agent, the actions of Hamiltons fully benefited IPFSL, who also did not oppose such actions.
- The Credit Select Series 4 loan is declared null and void as a result of the customers not being properly informed of the risks, the product not being suitable on the basis of their age, financial expertise and objectives and more importantly, being misrepresented in respect to the confiscatory nature of the Spanish IHT and the “antidote” offered by this product in addition to the empty promise that the investment would generate enough to pay for the loan.
Concluding, the Court orders the cancellation of the mortgage loan signed with the defendant IPFLS and orders the claimants to return the advance payment received.
(acting for the claimants in this case was solicitor Salvador Martinez Echeverría).
DANSKE BANK’S Equity Release Cava & Canapé Events
Danske Bank’s Champagne + canapé seminars did not spare any expenses when trying to capture unsuspecting owners for their Luxembourg-based “Total Wealth Planning” Equity Release scam.
Nor were they short of willing staff to confirm that their product was the best thing since sliced bread, against payment of a generous fee.
The following individuals attended sales events in different times:
- Gustavo García
- Anne Leighton
- Agnete Dale
- Oyving Bjornsen
- Ole Stenersen
Case Against Landsbanki: Fuengirola Court confirms that Equity Release Lenders Can Never Be “Just the Lender” and Nullifies a Mortgage Loan
ERVA has had access to a Fuengirola Court ruling won against Landsbanki Luxembourg.
In the case, the Judge states that it is not conceivable that Landsbanki Luxembourg would argue successfully that “they were only the lenders” when borrowers were made to sign disclaimers, pledge agreements were put in place and statements made in respect to the uncertain performance of the underlying investments with Lex Life.
Additionally, the presiding Judge states that he did not need to read the Tax Office binding decision -ruling out the possibility of obtaining any IHT benefits- to infer that such a possibility is manifestly incorrect and against logic/common sense and therefore, misleading.
The sentencing Judge classes OMM -Offshore Money Managers- as deliberately intent on defrauding, at worst, and negligent at best (Colin “McGreedy”) for issuing advertising promising any IHT benefits, stating that it is admitted that this company was the agent of Landsbanki.
Meanwhile, desperately rapacious psychopath (i.e. person devoid of empathy and remorse) Yvette Hamilius continues to ignore any sign that her employers could have made mistakes with the marketing of the “Equity Release” and relentlessly continues in her quest to grab pensioner’s properties.
This ruling sets an interesting precedent in respect to Rothschild’s much-vaunted allegation that they “were only the lenders”, when the loan was inextricably linked to investment portfolio via the pledge agreement and Rothschild did have, no matter what David de Rothschild and Eamon Bermigham say, a vetting procedure for prospective investments vehicles.
LANDSBANKI’s attempt to evict an 85-year old suffering from Alzheimer comes to a halt
Landsbanki’s Yvette Hamilius could not care less about people. The insensitive, greedy and immoral banker – currently indicted on a criminal case in France- would sooner evict an 85-year old sufferer of Alzheimer than to accept that sometimes, there is a line that you cannot cross over.
But she cares not and will do all that is within her powers to leave elderly people destitute. Unfortunately for her, on this occasion lawyers acting for an octogenarian couple victim of Landsbanki’s predatory banking have managed to persuade the Courts that it is not right to evict ailing elderly people.
The Ronda-based Judge denied Landsbanki’s petition to have the lady summoned once again. As a result of this setback, the lender has resigned to the fact that it may not be possible to just pull her out and thus, have agreed to have the Spanish Prosecutor Service representing the victim, as petitioned by lawyers acting for her.
NYKREDIT MARBELLA Shocking Banking Practices: A New Modality Of Outrageous Cheating
Just when we thought that Nykredit in Marbella, along with its mammoth parent Danish company (Nykredit Realkredit A/S), could not stoop any lower on how abhorrently they deal with customers, new events have proved us wrong.
This is the story: 3 families who are having their properties foreclosed on by Nykredit and are about to lose their homes –as a result of being sold an illegal `Spanish Equity Release Package` offered in conjunction with unregulated Sydbank- have just recently received letters from the main Denmark office urging them to make instalment payments to become “core customers” again and have their mortgages reinstated.
Placing due reliance on the representations made on the letters, customers have gone along and paid the sums requested on the letters.
The letters are true and real but have a catch: Nykredit says that they were sent by error and that they are not valid. Still, Nykredit keeps the money and continues with the forced sale.
In this case, foreclosure proceedings commenced back in May 2014 and the letters have been received end of 2016 and beginning of 2017. Incredibly, Nykredit stands by their comments and says it is a computer generated error which means the letters are not valid in law.
If we were to draw a parallel, Spanish banks have not even come close to this level of deceit. It is now time for the authorities to seriously contemplate revoking Nykredit’s authorization to operate in Spain.
Letters will be posted here shortly.
A Judge nullifies 12 equity release mortgages worth 6 million Euros
The sale was conducted through commission-driven financial advisors based in Estepona, Marbella and Fuengirola.
Court of First Instance 11 in Bilbao has ruled that twelve mortgage loans valued at 6 million Euros, granted to British families mostly in the Malaga province between 2004 and 2007, should be declared void.
The Court dealt with this case as all loans were granted at a Bilbao Notary Public and the representatives of the lender, SL Mortgage Funding nº1 Limited (SLMF), were also based in the Basque city, according to Lawbird Legal Services S.L.P.
These loans were sold to attain a reduction in potential inheritance tax, inasmuch as the mortgage would reduce the taxable value of the property, but also as a means to supplement the modest pensions received by the owners of the properties.
Chester-based SL Mortgage Funding nº1 Limited (SLMF) had not applied for the necessary regulatory permits to legally raise funds from the public and provide an investment service, activities reserved and regulated by the Bank of Spain and the CNMV (financial regulator).
In spite of not having any of the above authorizations, SLMF would lend but at the same time retain most of the proceeds of the loan, which would then be invested by them.
The ruling declares that “infringing the protocols set by the relevant administrative authority to supervise the disputed product is a regulatory violation that exceeds that of a mere breach of banking laws, such as misselling, so profusely dealt with recently in relation to the massive sale of complex financial products.”
The Judge held that in this case, the breach of public policy “is far more serious for it makes a mockery of a whole system of financial and banking supervision designed to prevent abuses to consumers and protect the stability of the sector”, and likens this behaviour “civil fraud”, which is any proposal that contravenes mandatory regulations or has a false or forbidden reason.
The sale of this product was conducted via commission-earning financial advisory firms (Hamiltons Financial Services, Henry Woods Investment Management and others), based in Estepona, Marbella and Fuengirola.
SLMF also recommended a network of lawyers that created an appearance of seriousness, downplaying the extent of the lack of licensing requirements of the bank and the product.
According to Lawbird Legal Services S.L.P., for the claimants, the ruling confirms that operating in breach of mandatory banking and financial regulations makes the suspect a “boiler room”, -even if the company was legally operating in their own country- and allows the victims to rid themselves of a nightmare lasting for over 10 years.
The Judge concludes that the nullity and voidness should be made applicable to all contracts and agreements executed between the clients and the bank, applying the laws of contractual termination in odd fashion –albeit most favourable- as clients “will be able to claim what consideration they gave under the contract without having to return was given to them.”
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