Antonio Flores
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Homepage: http://erva.es/members/aflores/
Málaga Appeal Court slams SLM for illegal mortgage selling.
The Málaga Appeal Court has rejected all grounds for appeal brought by SLM (Surrenda Link Mortgages) against the primary ruling by a Court of Instance in Fuengirola.
In the extensive ruling, the Courts bases its decision on 3 main arguments:
a) SLM had no authorization to sell what the judges deemed as a complex financial product made up of a mortgage loan, and a speculative investment vehicle. Not having a license to operate in Spain renders this proposition unlawful, and as such null and void ab initio.
b) The “lender” misrepresented material facts pertaining to the associated investment risks, labelling the product a safe choice to avoid inheritance tax (IHT) but also, a safe (again) bet to achieve an income. This turned out to be false.
c) SLM sold the product through a network of unqualified financial advisors, and a “selected” group of lawyers who, naturally, had zero financial investment capacitation or knowledge.
The high provincial Court rejects SLM’s attemp to fragment the product into a benign mortgage loan and the investment “arm” of the product, confirming that they could no exist without each other in the open market.
The ruling can be appealed by SLM at the Supreme Court, an appeal that would be seen as cruel, unecessary and a mere delay tactic to prevent the inevitable from happening: the invalidation of the mortgage loans on the claimants´ properties and their right to move on with their lives.
Landsbanki and Jyske Bank are refused to have their cases heard in Luxembourg and Denmark
Landsbanki in liquidation (perpetual it seems) and Jyske Bank are trying everything within their reach to have their cases extracted from Spanish Court and dealt with unfamiliar and likely bank-friendly jurisdictions, such as Luxembourg and Denmark.
However, Spanish Courts will have none of that and have confirmed, on appeal too, that at least 9 cases brought by lawyers
on behalf of equity release victims- -Lawbird Legal Services represented by Juan Martínez Soler in this case- against Landsbanki will be entirely ventilated in Spain and, equally, in no less than 3 cases brought against Jyske Bank will also be heard before Spanish judges.
The main argument Spanish banks are invoking is an exclusive jurisdiction clause tied up to the place of location of the property, known in latin as ” La Lex loci rei sitæ “.
Expert Witness Reports on Equity Release Concluded
The first 2 reports drawn up by the compay Muntaudit (http://muntaudit.es/) have now been received.
One refers to Nykredit/Sydbank and the second one to Finansbanken/Sparekassen Lolland Equity Release products.
The first point that the independent firm of financial auditors has highlighted is that the product was taken out for the purpose of obtaining a tax advantage and securing an income stream. The report then notes the following:
- The contract of Equity Release was offered to pensioners as a way to improve their quality of living by providing an additional income stream (in addition to the false tax advantages).
- The contract does not clearly warn of the risks involved in the transaction -interest rate risk, exchange rate risk, price risk, market risk, operational risk, lack of liquidity risk, early redemption risk (on the side of the bank)-
- It is considered to be a high-risk complex instrument.
- The contract does not include the TAE clause (in English, APR or Annual Percentage Rate)
- The ability of ever producing a result as advertised by the bank and agents, irrespective of the investor profile, is very low.
- For a low risk investor, the product has an almost 100% probability of producing a negative result from the very moment it is signed.
- The product is classified as “high-risk” and not suitable for a low risk investor.
- The client profile, highly conservative retail investor, had specific and concrete requirements and as such, had they known the type of investment they were getting into, these contracts would have not been taken out.
The reports will be used in the legal claims that are being filed against banks who marketed, offered and mis-sold Equity Release products to a very large contingent of pensioners residing in Spain.
Petition Filed With Courts to Declare Jyske Bank Valuations Illegal
Lawyers acting for a Jyske customer have filed a petition against Jyske Bank to declare foreclosure proceedings null and void,on grounds that the valuation was carried out by an unlicensed valuation company, Gibsons Chartered Surveyors.
And whilst the company’s legality was not put under question, their ability to legally provide valid valuations for mortgage loan purposes in Spain was and therefore, acting lawyers have requested, initially, that foreclure proceedings are halted and annulled and will, at a second stage, apply for the mortgage loan contract to be set aside.
Lawyers acting for the bank have contested the petition by claiming rather confusingly that Jyske Bank A/S London Branch is not Jyske Bank A/S Denmark nor Jyske Bank Gibraltar, and that as a result, they do not come under Spanish laws. This has proven to be a lie.
Also, they have not however contested the fact that only companies authorized by the Bank of Spain can provide valid valuations and insist that, as the loan was “granted” in London, Uk laws apply to the loan.
The repercussions of this could be enourmous for Gibson Chartered Surveyors have worked for Barclays Bank Plc, Newcastle Building Society, Norwich and Peterborough Building Society, Credit Suisse (Gibraltar) Ltd, and ABM Amro Bank when giving out, presumably, hundreds of mortgage loans in Spain.
The ERVA files a claim with the Madrid Courts (Audiencia Nacional)
The ERVA has filed a criminal complaint, with date of 7th of November 2011, against Danske Bank, Nordea Bank, N M Rothschild & Sons, Lex Life & Pension, Landsbanki, Jyske Bank, Finansbanken, Nykredit, Sydbank y Swiss Life, for allegedly conspiring to defraud hundreds of retired people by knowingly, without belief in its truth or reckelessly and carelessly whether it be true of false, attributing specific qualities to a product known as “Equity Release”. These qualities, both proven to be wrong, were that the would a) provide an income and b) allow to lawfully dodge Spanish taxes.
A press release is taking place today, at 17.30, in Marbella, where the press will be made aware of the content of the claim, which is to be posted here shortly.
The Equity Release Victims Association Up and Running
The Equity Release Victims Association (ERVA) – (www.erva.es) is now up and running. Having been formally incorporated last Wednesday, through a Marbella Notary Public, it has, among its aims, denouncing the magnitude of the infringements committed by a number of banks, mostly Scandinavian who, in clear breach of applicable legislation (regulatory, consumer protection, civil, banking, financial, and not the least, ethical), devised a tax-evading scheme that would be offered to pensioners to profit from them, using the illicit excuse that it was suicidal not to have a mortgage registered against their properties.
The ERVA will be formally filing claims with the appropriate Government offices, requesting formally not only that these products are banned in future but also, that the banks that offered them are disciplined in accordance to the seriousness of the offences committed. Of particular importance are:
- Denunciation at the Spanish Prosecution Office (Fiscalia), requesting that a full investigation is conducted into the alleged tax-evasion proposition that constituted the main selling feature of these Equity Release schemes, and consequently, the well-defined target market this scheme was aimed at: financially conservative and vulnerable pensioners owners of an unencumbered retirement homes. Equally, of great significance is the financial state these schemes have left countless numbers of victims, as well as the major implications for their state of mental health and well-being (typically, the infliction of mental and emotional anguish of being deprived of their life-savings ultimately and more immediately, a roof to live under). Even if these banks are no longer offering these obnoxious products, the writ will specifically request that the Spanish Prosecution Office, by application of article 26 of the 34/1988 Publicity Act, in relation to article 29, pursues the cessation action to prevent them from offering them in future.
- Denunciation at the financial and insurance regulators (Comisión Nacional Mercado de Valores and Dirección General de Seguros), and the Bank of Spain (Banco de España), who will be requested that a thorough study is made into the validity of a contract of Equity Release, not approved for use in Spain under 2007 Reverse Mortgages Act and prior to its enactment, by the uses and customs of banking practices (as the Spanish equity release equivalent was not regulated formally until then although, it was specifically described as a product to allow asset “rich” pensioners access to this wealth, all the while having full guarantees of living in the property for the rest of their lives). The ERVA will specifically request that disciplinary and exemplary fines are imposed on the infringing banks, inclusive of a temporary suspension of their activities within Spain.
- Denunciation at the Regional and National Consumers Association, to obtain a ruling condemning the publicity as false or deceptive advertising and fining these entities proportionally, in accordance to article 36 of the 26/ 1984 Consumers and Users Protection Act, applicable prior to 2007. Given the impact, relevance and geographical scope of the mis-selling of Equity Release schemes, the ERVA should request that the infractions committed by these banks are deemed “very serious” and the highest possible fines imposed (from €600,000 to 5 times the amount of the product mis-sold, as well the closing of the branch offices of the offending banks wherefrom the products were sold, for up to 5 years).
The list of proposed actions is not exhaustive and may include other proposals in the countries of origin of the offending banks.
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Original Post: The Equity Release Victims Association Up and Running
