Antonio Flores’ Blog

I have an American client, Ray, who happens to be a CAM Bank client. Several months ago, Ray got caught up by this bank’s disastrous decision-making processes and stuck in what seems an unresolvable legal quagmire.

Ray bought from a developer off-plan, back in 2005. In 2008 the properties were finished and licensed but, because the developer was running into problems, there were court cases being filed, and potentially embargoes being registered against the units, including his. So to protect him, on our advice he chose to complete on the property assuming the existing mortgage, without qualifying with the CAM as the application had not been submitted.

On a property valued at €900,000, he had paid more than half of it, during the course of the construction.

The situation was that he owned the property but the mortgage was in the developer’s name, although he kept his payments up to date. Twelve months ago, his loan fell behind by €300 during 3 days, and the CAM, because it coincided in time that they had just foreclosed on the loans on the other unsold units, seized the opportunity and did the same with his. Two days after this he had €20k in his account to cover several installments, but CAM refused point blank to reinstate. No other bank will lend him now, even though is not in a bad creditors list, because of this unusual situation.

This is an example that shows that some banks choose to be where they are: they are just bad banks with bad people running them, no more, and the CAM, the fourth largest savings bank in Spain, epitomises this.

Ray is not alone, as there seems to be a large number of clients who have had to deal with branch managers lacking the minimum common sense you expect from someone in their position. If you are one of those affected, we would love to here you story.

Today on Talk Radio Europe

For those of you interested, I will be today around 4.00 PM on the Life At Five with Allan Tee Show on Talk Radio Europe, to discuss this matter.

You can tune in directly through their website (internet stream), or through the FM frequency assigned in your area.

Antonio Flores Mortgages bank repossessions, CAM, CAM Bank, foreclosure

My client has had a narrow escape: having been notified in early March by the courts that his property was to be auctioned by Danske Bank, at 11:00h of the 8^th of June 2011, we managed to obtain from the same court a ruling suspending the auction exactly…24 hours before (just like that one last call from the Alabama Governor…)

And prior to this, on the 27^th of May 2011, that is, just a few days before the auction, we are advised, through the courts (Document in PDF), that, unbeknownst to him, my client did indeed have €126,946.64 with Danske Bank, in some account in Luxembourg, which is what he had been wiring to them, over the years, to attempt to placate them and avoid being kicked out of his retirement home bought with his life-savings. One can only imagine the topnotch service Danske bank provided my client once they had abandoned Spain, not before trying to repossess a few homes in its wake. Danske Bank had all but forgotten about this money until the very end, and they have the cheek to say that the debtor had paid up this sum when, as a matter of fact, it had been blocked for years.

So if it was not enough stress, we added that extra bit to it by, unwillingly, choosing the latest of the possible dates (other than tomorrow) to set aside the sale at public auction instigated by Danske Bank against a 73 year-old retired mariner victim of an equity-release, who had been conned into believing that, by going with the biggest Bank in Denmark and contracting what is effectively a tax-evading financial product on his unencumbered retirement home, he would have a monthly payment coming his way, pretty much all the inheritance tax his daughters would be hit with waived or wiped out and all of it, without risking anything (apart from his home, his health and, potentially, his two beautiful daughters’ freedom, as they would have been eligible for prison sentences to be served at Alhaurin prison, 10 minutes’ drive from the foreclosed home, had they followed Danske Bank’s careful tax planning).

The Judge had no choice but to suspend the auction as, alongside these foreclosure proceedings claiming approximately €845,000 (which is what Danske Bank’s clever and optimized investing has lost, or rather, in my opinion, allegedly misappropriated), a criminal complaint had been lodged in Mijas against CEO Peter Staarup and his sales guys once based on the Costa del Sol, including an unregulated IFA hired by the bank.

These are some the promises made by Danske Bank on its prospectus:

• Exempt from Spanish Inheritance Tax : if the beneficiaries, on the death of the insured, are not residents in Spain, the capital will not be liable to Spanish inheritance tax.
• Investment Strategy: CAUTIOUS

If this is what the HMRC thinks about tax-avoidance schemes, what would they say about the Danske Bank Tax-Evasion Capital Assurance product?

Documents

• 21-03-2011 – Danske Bank Equity Release Lawbird Client Case – Auction Notice (PDF – 70Kb)
• 07-06-2011 – Danske Bank Equity Release Lawbird Client Case – Auction Judge Suspension Order (PDF – 72Kb)

Antonio Flores Litigation, Mortgages Danske Bank, equity release

Convicted conman John Doust was right in one thing, when reflecting on the reasons why he had become exposed as one of the longest-serving crooks around: “internet is a terrible thing”. It definetely proved awful to him, to the point that even a  relative of his found out about his latest scam via the cyberspace!

For Nykredit and Sydbank, Internet can administer the coup de grace for equity release contracts, signed with otherwise happy British unencumbered property owners, that invariably failed to achieve what was intended from them, leaving the supposedly happy beneficiaries in dire financial ruin.

It is not known how many people actually signed with them but what is clear is that Nykredit and Sydbank, in the process of recruiting their clients and getting them to sign up for their losing financial product, broke every existing law, regulation, norm, code of conduct, you name it. So since my previous post was boring enough with all the laws that these guys infringed, I will just outline 2 decisive aspects of their actions that would define their activities:

• They arrived in Spain through the back door: if the first stop for any entity or person who wishes to legally and properly advise on financial products or services in Spain is the CNMV (Spanish regulator), then the duet Nykredit/Sydbank must have swam in from Mediterranean to reach the Costa del Sol, or perhaps used the vehicle of the photo. If you go to the CNMV website you will not find trace of any of the two Danish banks…

• They arrived in Spain through the back door and actually knew they were doing so. You see, the WayBackMachine.org site tells us that back in 2007, Nykredit was selling equity release in Spain but were aware that they could not do so, and to warn people they actually posted a warning on their website that read:

“Please note that due to legal barriers, we currently only offer mortgage loans in France and Spain to Scandinavian retail customers.”

Because once you get into the habit of breaking the laws and other inconvenient regulations implemented by a different country , you end up doing the same with self-imposed prohibitions like the one above. Nykredit and Sydbank were just never allowed/authorised/cleared/legally entitled offer or sell equity release programmes to anyone in Spain, whether Scandis or not.

Shortly after realizing  how wrong they were, they removed the equity release page…

And my clients, all over 60, British, and retired, have had to rent their property, start working (a lady in particular is now cleaning other people’s homes) and suffer untold levels of stress since having the misfortune of crossing paths with the chap on the picture…

Antonio Flores Litigation, Mortgages, Property, Scams equi, equity release, Nykredit, Sydbank

Two posts ago, in my post titled Spanish Property Auction Horror, I mentioned a very innovative court ruling that allowed someone in Navarra to walk away from their property (a process called in Spanish Dacion en Pago) without the risk of going through what the Wiltshire couple mentioned in the post went through.

Some notes on the ruling (PDF, Spanish) so that an opinion can be formed on it:

• A bank forecloses and repossesses, given that bidders (that species in extreme danger of extinction) fail yet again to turn up. The value given to the property, on application of the mortgage foreclosure archaic provisions, is of approximately €20,000 under the debt.
• The Court of First Instance rules that it would not be equitable and fair for the bank to charge this amount and reject enforcing collection of this debt.
• The Court of Appeal, deciding on the legal challenge brought by the bank, does not consider its entitlement to claim a further €20,000, after the property has been repossessed, to be an “abuse of discretion“, from a formal point of view, for the law has been applied in its own terms.
• The court does consider, conversely, that since the bank allocated a value of €75,000 to the property when the mortgage deeds were signed, this specific aspect of the initial agreement cannot be glossed over and requires further understanding.
• The court goes on to say that, when appealing the initial ruling, the bank conveys a morally  alarming reflection, it being the known fact that the property is now worth far less due to adverse economic circumstances, adding that such situation is not attributable to the property ex-owner but to international economic crisis reasons, an opinion the Court says is shared by the Spanish Prime Minister as well as Mr. Barack Obama.
• As a consequence of this, continues the Court of Appeal, the bank, being an integral part of the economic system and therefore not aloof from the above considerations, is partly responsible for their -irresponsible- role in the most savage crisis since 1929.
• The court then invokes that laws have to be interpreted according to the reality of the time when they are to be applied (article 3 of the Spanish Civil Code) and, to the surprise of many, and in spite of repeating that it would it not be abuse of discretion to enforce the €20,000, reckons it morally reproachable for the bank to pursue borrowers for a fictitious sum when, at the time of granting the loan, the value of the property was more than enough to cover the loan and that this situation has not been occasioned through any fault of their own, nor that of the bank, although the reality is that the latter is a protagonist of the collapsed financial system. It also then adds that bank’s reason for pursuing the borrowers (economic crisis) is a highly sensitive issue that have made a lot of people “hot under the collar”.
• Finally, the court rules that in respect of the reduced value of the repossessed property, for which the bank showed no documentary evidence, the formal adjudication (repossession) of it, given its initial bank-accepted initial valuation of €75,000, is enough to cancel the debt.

So what have the reactions been to this?

• Spanish Consumers Associations are understandably over the moon and hail the ruling as very brave. FACUA, one of them, has its reservations as it, they say, the Government that now needs to make a legal move to change the laws. If not, they claim, they will lobby for the laws to be reviewed to accommodate this very consumer-friendly ruling. Finally, they insist that a law-change is necessary to break once and for all with the harrowing consequences that the price-inflating conspiracy plotted by banks and valuation companies has had on consumers.
• Spanish Bankers Association are understandably mad at it as they claim, if it becomes rule then lending markets may go through turmoil, lenders will increase interest rates, investors would not trust a system where contracts can be broken (yeah, tell this to the victims of the  Spanish off-plan property fiasco, or are they not investors?) and some consideration or other. They encourage banks to fight this new trend.
• Someone called Moody’s claims that it is an isolated case and that it should not be made rule, given that it would encourage borrowers to default when they feel that the property is in negative equity. It also says that it goes against Spanish laws and warns that, if it sets a precedent, they will have to put the Spanish mortgage market under scrutiny and perhaps, have it revised.

Antonio Flores Mortgages, Property bank repossessions, dacion en pago, foreclosure in spain, handing back the keys

As tempting as it may look, “handing over the keys” to the bank (dacion en pago in Spanish) , without pre-arranging this via a Notary Public and disappearing, has to be done with care, for being pretty dangerous, unless you have the right figures. Or you happen to have been lucky enough to have been judged by the court in Navarra that has ruled that the bank is not entitled to not accept the “handing” in of the keys, in a very relevant decision.

This ruling (to be discussed on a next post), however important it may seem, does not take away the horror of our mortgage foreclosure legislation. The reason for this happening is that Spanish provisions in respect of foreclosures, unlike other countries, stipulate that auctions will be valid so long as the minimum bid is over 50% of the auction start price (the latter value generally being pre-agreed when signing the mortgage deeds and equivalent to the valuation), irrespective of the current outstanding debt with the bank.

I have taken a real-life example, on a property at Jardines de Casares, and to understand this have attached the following:

• The print out we got from the bank after the property had been repossessed, showing the existing debt and the value the property achieved at auction.
• The value given to the property, in 2006, for auction purposes (coincidental with the valuation).

So we have then that property was valued, for auction purposes, at €350,700 (the auction start price), the outstanding mortgage was of €243,217 and, as usual, nobody of interest turned up (only retired law-lovers and the occasional passers-by) .

The auction kicked off with only the bank being present -and a few curious skinned time wasters -rapidly skipped the 70% ASP mark and ended being repossessed for 50% of this value. And the “summarily executed” debtor ended up, as a consequence of these unfair laws, without a property but still owing €67,867 plus a further €100,000 approximately in legal costs and arrears interest (19% p.a.).

In the above case-study, from the debtors perspective (which is the one we are interested in here), the following scenarios and consequences were possible (although only scenario 5 was probable, considering the value of the property and the area):

1. Bidder(s) turn up and bid over the debt (being over 70% of the start price): we walk away with no property but no debt and probably some spare cash.
2. Bidder(s) turn up and match the bank debt (between 50% and 70% of the start price): we walk away with no property but no debt. In this case we would have the right, within 10 days, to bring a third party to improve the bid.
3. No bidder(s) turn up but the bank repossesses for the debt value: we walk away with no property but, luckily, no debt.
4. No bidder(s) turn up and bank repossess at over 70% of the start price but under the debt: we walk away with no property and the horrific auction negative-equity.
5. As point 4 but bank repossess at under 70% of the ASP (sometimes at 50% of start price or the value of the debt): we walk away with no property and a larger auction negative-equity, worst than 4. However, albeit illusory, we still have 10 days to bring a third party to improve the bid, up to 70% or the debt.

Under the current Spanish foreclosure system, if we find ourselves in the scenarios of points 4 and 5 we can end up being chased for the difference (which is fictitious although becomes very real once the Judge’s gavel goes down!), calculated by subtracting what article 670 of the LEC (civil Procedural Act) allows the bank to keep the property for, from what we owe them, just as the couple from Wiltshire are experiencing, to their sorrow.

And so, what options do we have? Not many, but I can propose two:

• Stop paying your mortgage and try to convince the bank that it is silly to go to Court and clever to take the property back, because a) you have no property in Europe and b) you are going to live in Peru for the rest of your life (don’t be shy here, concoct a proper story, set them up!)
• If you are not in any of those scenarios, or are too honest to lie, find a friend who will be happy to put in a dummy bid to push the auction value up to the debt you have with the bank. Your friend will have to put down, as a deposit, 30% of the starting price (just over €100,000), and needs to get the bank to make a first bid equivalent to the debt. This will free you from the negative equity, and your friend will be free to get the deposit back, job done satisfactorily! Careful though: the bank’s representative may push his bid short of the debt, making your friend put a higher bid only for the bank to then…pull out. Now your friend has a problem!

And bear in mind the following:

• Most auctions end up with the bank repossessing as they will not -yet- settle for anything less than the outstanding mortgage capital (even if it is way over the market value). We should see a change happening towards mid-2011, as the Bank of Spain has already warned.
• Bidders currently discard 95% of the auctions happening in Spanish courts.

Antonio Flores Mortgages, Property bank repossessions, dacion en pago, foreclosure in spain, spanish property auctions

Banks must have done something really dodgy in respect of these Russian-roulette swap contracts, because, besides the deluge of rulings tagging these instruments as the epitome of banking misrepresentation, one particular court in Madrid has now issued, at the request of the Banking Services’ Consumers Association, a search warrant in the central offices of the BBVA bank, the second biggest in Spain.

The execution of the measure was set for the 21st of December, since the bank was refusing to provide the court with a list of consumers that had signed up to the protection provided by these contracts against interest rate fluctuations, thinking this was the case. To avoid further embarrassment, BBVA decided to hand in the paperwork a few days before the deadline.

Statistically, I would say that 3 courts out of 4 are now rendering these contracts as null and void since they were sold as an insurance cover in the event of heavy interest rate fluctuations (upwards obviously) but craftily concealed the scenario where, if they went down, the bank would be cashing in. Courts understand that these contracts hid a complex financial-speculative derivative product that has caused thousands to lose millions in favour of banks.

Fortunately for lawyers acting on behalf of victims of this misrepresentation, each bank has a standard contract that applies throughout Spain, so, once a ruling is reached by a Court in respect of say, Banco Sabadell or Caja España, it is very difficult for a claim brought under the same grounds to be rejected by a different court (but may happen, after all, it’s the judiciary!).

So what’s the solution to this then? Well, if you ask me with my lawyer’s hat on, I’d say instruct me! But if you want to give it a go yourself, and give me a miss, this is what I propose:

1. Ask your bank for a copy of the swap contract, in case you don’t have it.
2. Go to the extraordinary website of the Asuapedefin and Apymifid associations and try to find the name of your bank among the 100 or so favourable rulings posted there (the column on the right of the screen). If you can find it, print it.
3. Get a letter out to the bank advising them that, due to the swap contract’s absolute nullity, you will not accept any more withdrawals from your bank account.  I have typed up a letter (see below) that will help you address these issues, and which you will need sent via official channels, i.e. “burofax”, irrespective of whether you hand-deliver or fax it, to ensure acknowledgement of content and recorded delivery, for litigation purposes.
4. If you can personally go to the branch to deliver the letter, do it. If you have found a copy of a ruling against your bank, don’t forget to enclose it.
5. The following can happen once they get the letter:
   1. that they bin it (very likely),
   2. that they make you an offer or settlement, which would normally come in a roundabout way so that you don’t notice that what they’re really after is to sting you once again (likely),
   3. or that they accept tearing up the contract and reimbursing you the sums you have lost so far (very unlikely).
6. If they offer you an offer or settlement, analise it carefully. At this point you need to understand one thing: a derivative contract is an agreement that is known, to financiers, as a “zero-sum game”. This means that one party’s loss is equal to its counterparty’s gain and therefore, the only way for you to win is that the bank loses, and vice versa. So when negotiating, do keep this in mind.
7. If you get really tired of trying to get an answer from the financial entity, then your best bet is to hire legal representation and go to court. This will allow you to get on with your life and with more productive matters.

Documents

• Swap Cancellation Letter to Bank Template (PDf – 121Kb)

Antonio Flores Litigation, Mortgages, Property abusive mortgage clauses, Banco Sabadell, BBVA, Caja España, mortgage clip, spanish swap, Swap Clause

This is the question I was asked the other day by one of my clients who was about to show me the letter he had just received from his lender, the Danske Bank.

I am appealing to your empathy, and, to that extent, I want you to sit back and think, think how would you feel if after a life of hard work, when you were about to reap the deserved enjoyments of retirement and you had invested all your savings to purchase a hilltop beautiful villa on the Costa del Sol, the following happened (chronologically):

• You landed in Spain having sold your property in the country where you lived the last 60 years, cashed your pension and emptied your local bank accounts.
• You bought your retirement home with your life time savings, mortgage free.
• One sunny Saturday, one bloke, who happened to be a friend of a friend, turned up for lunch with a grin the size of a half-moon.
• After a few glasses of wine and after listening patiently to a rather boring recount of what you think is a vivid lifetime of experiences (might be for you, not for your new friend), this bloke, who you now think is a new friend, reacting with apparent anguish suddenly interrupts you to enquire whether your children are sufficiently protected against Spanish Inheritance Tax, which he conveniently sells as a happiness killer.
• Since by now, owing to the sun and the wine, you trust him, you open your ears and eyes as he explains that you are in serious danger of ruining your future, and that of your children.
• Avid to learn more, you enquire, and because he is in a hurry, he suddenly and quickly offers you a miraculous financial instrument to ensure that not only your unencumbered home is protected but also, you will have a monthly payment for life.
• By now you are well sober, listening to the wonder product that will protect your family plus give you some pocket money. Your friend tells you that he works for Danske Bank and that he can help.

[…]

A few years down the line

• Your friend has disappeared, your property has an embargo on it, Danske Bank is asking you to return €850,000 which you never saw and then you receive, by post, the following letter (click to open in PDF):

• Difficult as it is, you manage to read the letter, and you understand what it implies: your own bank, Danske Bank, without you ever writing to them, and who was entrusted with looking after, investing and providing a return on €1,030,000 (and which they managed to reduce by €850,000 thanks to cautious investing), which they extracted from your home on false pretences has the gall, in spite of it all, to let you know that you happen to have instructed them to debit your  (blocked) account with €23,703, in cover of “LEGAL COSTS” in favour of their own lawyers’ account in Spain so that these lawyers can…errr, sue YOU and repossess YOUR home, after having efficiently lost your life time savings in some volatile very-high-risk Luxembourg bond that was sold to you as cautious.

You have now discovered what the “Danske Bank Kick in the Bollocks” is all about!

Antonio Flores Litigation, Mortgages, Property bank repossessions, Danske Bank, equity release, financial miss selling in Spain, reverse mortgages

The worst scourge of the Costa del Sol never sleeps. If we were used to boiler rooms selling shares, timeshare, legal services (sadly still operating and preying on those who have already lost money to some other boiler room), the very latest scam has now adopted the form of a 120% mortgage loan.

Wise Mortgages, run by a chap who answers to the name John Gladstone, is offering steroidal 120% LTV (loan-to-value) mortgages. The funny thing (there is certainly no fun if you have been stung) is that he claims that a company he works with lends the money.

The mechanism of this loan scam is based on the advance fee fraud, where you pay for something you never get. In the case of Wise Mortgages you end up paying for, probably (as I don’t know anyone who has paid for more than 1 concept), three different concepts: valuation, arrangement fee and insurance policy. I don’t think there is any more to say about this despicable man and what he does, but before I close the post, below is an open letter to Mr John Doust, the real name of John Gladstone.

Open Letter to John Gladstone

Hello John,

No doubt that when reading this post you’ll be taken over with raging fury, surely, as I would if I was framed looking like a silly crook signing worthless paperwork. But think about it for a second, you should be grateful to me: I am saving you from being arrested, yet again, by the Malaga Police Fraud Department II (that is, if you run fast).

We have had a coffee together and I have asked you a straight question: who is the guy on the picture, do you know him? And you have chosen to tell me, several times, that he is the originator of the concept of Wise Mortgages and that you hardly ever see him. You have then also warned me that I should keep it under my hat because it could bring me problems, as a few people who exposed Doust have been jailed for attempting to defame “him”.

You may recall that we spoke on the phone (and I recorded you), and asked you again the same straight question: do you ever see John Doust? And again, your answer was: hardly ever, he lives further down the Coast, but is not relevant anyway. Oh yes, hardly relevant, especially when you can hardly avoid seeing your own self every second of your life.

Also, there are some recordings where you deny seeing John Doust, where you say that these mortgages are whiter than white and a few other lies. You don’t lie however when you admit that google is a terrible thing, for you, that is (not for your existing and future victims).

John, because you are hardly a descendant of Gladstone , you are in fact John Doust, previously John De L’Ouest and at times Michel West or John Michael, a tall and chubby man boasting an unrivalled criminal history and probably the oldest-serving conman currently still roaming the Spanish Costas, operating from an anonymous 3rd floor rented office in a central Marbella building.

So no hard feelings John: I don’t think that you are an unpleasant man but your time as a fraudster is now over: the inexorable march of technology has made it now very difficult to hide your criminal activities behind a silly website offering impossible 120% mortgages (you even have the arrogance to actually contemplate lending this money if HSBC doesn´t!) and the cheerful and “wise” yet fictitious disguise figure of John Gladstone, which you have thought up as being a descendant of the pensive 19th Century 4 times Primer Minister of England (below).

Antonio Flores Mortgages, Scams Advance Fee Fraud, John Doust, John Gladstone, Wise Mortgages

Following my previous post, where I propose a decalogue of tips to obtain a response from the bank when it is just not possible to keep repaying, below I have excerpted a sample of a letter of instruction, given to a lawyer, to act on behalf of the troubled borrower when nothing else has worked. The associated fees are not so important (there is absolute freedom in this respect) but it would give a guidance as to what should be expected when having to deal with this scenario and the actions that can be taken.

Letter to Potential Client

Dear Mr Doe

In relation to our services regarding your mortgage loan, our firm can act for you in three distinct stages:

1. Actions to attempt to reduce the mortgage installment whether by re-mortgaging, conversion of the repayment to interest only, reduction of the interest rate being applied (3.5 % should be the interest payable now) or a combination of all. The acceptance by the bank implies signing a contract with the new conditions and requires that you are present, unless we act for you with a power of attorney.
2. Actions to attempt to obtain an agreement whereby the debt is to be cancelled against transfer of the property to the bank, if repaying a loan is not possible. The acceptance by the bank implies signing a mortgage deed of transfer of the property and requires that you are present, unless we act for you with a power of attorney.
3. Actions in a Court of Law should none of the above are attained. In this instance you may need to have a lawyer acting for you if the equity on the property is substantial as you may wish to try to sell before auction (or ensure you get a fair deal) and this requires liaison with Court proceedings. Also, if you reach the auction stage, having a lawyer may help in ensuring that if there are bidders for the property they can get the information for the property promptly, even if it means providing them with access to it (many bidders refrain precisely because they cannot access the property, which is an obvious thing!). Finally, note that it is possible for the bank to foreclose and adjudicate the property, through the Courts, for 50% of the value of the property for mortgage purposes (that generally coincides with the valuation), which could be far less than the debt. This means that if the value of the property is 100.000 the debt is 90.000 Euros, the bank could end up keeping the property for 50.000 Euros, and you would still owe 40.000 Euros. It is therefore recommendable to appoint a lawyer and find a “dummy” bidder (who would be a friend) to force the bank to push up the bid as much as possible. This however would require lodging 30% of the value of the property for mortgage purposes, a deposit that would be reimbursed by the Courts.

Courts can take up to 12 months to finally adjudicate the property to the creditor or a third party so there is some time to act.

If the equity is negligible or negative (the outstanding mortgage loan will need to be increased by an average of 10 per cent for legal fees and arrears) there is no point in incurring in heavy legal fees unless there is an opportunity to sell it, or there is a risk that a substantial portion of the debt will remain unsettled (as explained in point 3).  Renting the property during this period will bring in some cash but it is advisable to inform the tenant of the situation, unless it is for short rental.

Our fees to act on your behalf have already taken into account the financial difficulties faced and are as follows:

• For Stage 1: 750 Euros plus VAT (inclusive of signing at the Notary office).
• For Stage 2: 1400 Euros plus VAT (inclusive of signing at the Notary office
• For Stage 1 and 2: 1600 Euros VAT.
• For stage 3: will depend on the value of the property (minus whichever amount paid as above).

Although it is not possible to force banks to agree, acting quickly can help your position as bankers sympathise with borrowers who are sincere and upfront in their proposals. We are aware that your current predicament is shared by many property owners and that you may sustain a monetary loss if you eventually lose the property. In addition, it is important that you take some measures to limit or even eliminate completely any bad credit records both in Spain and in your country as well as to try and prevent any further action by the bank.

Antonio Flores Mortgages, Property, Uncategorized dacion en pago, foreclosure in spain, spanish mortgage repayments

After absorbing tens of thousands of properties through negotiation with defaulting borrowers, or via foreclosure proceedings, banks are now property-sicker than ever to take on anymore bricks and mortar that are less valuable than the loans registered against them.

When not being able to repay the loan and when such loan is well over the value of the property, one has to implement some creativity when attempting to convince the lender that they should book an appointment at the Notary Public to arrange the process of Dacion en Pago, where your loan is cancelled against transfer of title to the bank (or in plain English, handing over the keys to the bank), without going to Court.

Unfortunately, this is generally quite difficult to achieve, but where there is no other option, one has to press on. Here are a few tips, some of which I have borrowed from Manuel Gonzalez, a blogger expert in the matter :

1. Find ways to get rid of other assets you may have: Careful however, do it before you start defaulting as you could be accused of concealment of assets (alzamiento de bienes).
2. Stop paying: Some people like to think that by keeping up the repayments you are a more authoritative negotiator. Quite the contrary! If they see that you are repaying there is no need for them to waste their time with you.
3. Understand your enemy and know the way he thinks: Understand what is the reason for them not to be interested in keeping your property, and why that keenness in “screwing you”. So when approaching a bank manager or clerk, try to concentrate on attacking the lender as an entity, not the person individually, even if he was the guy who shook your hand when you first bought the property. These guys, understandably, will be following instructions, and so it will be better to befriend them, as they may be in your position tomorrow and could even share some tips with you.
4. Prepare your paperwork and check the value of the property for mortgage purposes, if it is equal or higher than the debt you have.
5. Approach the bank manager, and if possible, the area risk manager, and expose your predicament. Try to have empathy and expect and demand same, they could be sacked by close of business (day).
6. Have a formal notice sent to the bank: It is important the your meeting and your intentions are documented. A burofax is the preferred and cheaper method.
7. Persevere: You are already causing discomfort to the persons working in the branch and to the entity, which is very good. If you have the time try to pay them a visit every day or every other day, although always in a friendly manner. You will manage to stand out from the rest of dacion en pago pursuers and will come across as a man/woman on a mission.
8. If credible, advise them that you are leaving the country as you have managed to secure a 10 year contract as a dockmaster in Antananarivo port, Mauritania, or an equivalent extravagant location. Have your supporting paperwork ready, and if you don’t have it just make it up!
9. Don’t fall for the branch manager scaremongering tactics: Make sure that you show no emotions when they tell you that, if you stop paying, they will take you to court, and that your debt will exponentially grow with all those lawyers’ fees, arrears interest and costs, as bank managers are used to saying. Offer them a friendly grin and the shoulder shrug, which incidentally will also help you train your trapezius muscles. Also, don’t be so silly to wear your best suit and Italian shoes when meeting with the area risk manager. Smart but casual is the norm: sporting sandals, or flips flops, with socks, will do the job. I suggest something like this.
10. And finally, be ruthless, just like they are and have been with you since you first stepped into that branch.

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