Judgment of the CJUE on IRPH mortgages
h2 style=”text-align: justify;”>CJEU Judgment on the Mortgage Loan Reference Index (IRPH): door open to consumers for their declaration of abusiveness and recovery of unduly paid interest.
Last Tuesday, March 3, 2020, we met the Sentence by which, finally , the Court of Justice of the European Union (TJUE) has resolved the preliminary ruling question raised more than three years ago in relation to the possibility of subjecting to abusiveness control the clauses of the mortgage loans that introduce the Reference Index as a reference index of Mortgage Loans, better known by its acronym, IRPH.
The judgment concludes that indeed, the Spanish courts can analyze the abusiveness of the clause that establishes the IRPH as an index linked to loans with mortgage guarantee, carrying out the corresponding control of transparency, and in any case, said analysis must be carried out on a case-by-case basis.
The IRPH was a benchmark index for calculating interest on mortgage-backed loans that, since 1994, had been used in our country as an alternative to the Euribor, the index used, and was calculated by the Bank of Spain from the average of the data provided by banks and savings banks on the interest rates of mortgage loans for three or more years.
What raised the alarm about the possible abusiveness of the IRPH is that this index was always higher than the Euribor and, when in 2013 the latter began to drop to values negative, the IRPH always remained at very high values.
At first the Supreme Court, in its Judgment 669/2017 of December 14, 2017, concluded that said index was not susceptible to being subjected to the control of abusiveness that It had been carried out by the Spanish Courts and Tribunals in relation to other types of banking clauses such as those known as “floor clauses”, early expiration clauses or clauses related to the establishment of commissions.
Nevertheless, said Judgment had the individual vote of Mr. Francisco Javier Orduña, then magistrate of the First Chamber of the Supreme Court, which motivated that on the part of the First Court Instance no. >
- The IRPH submits to the rules that, on the enforceability of transparency in the clauses included in contracts with consumers and users, are established in Directive 93/13/EEC of the Council on abusive clauses in contracts entered into with consumers .
- Only the national judge can determine, in each case, if the clause that incorporates the IRPH into a loan contract exceeds or not the transparency requirements demanded in the Directive through a casuistic analysis of the information provided to the consumer, publicity of the same, clarity of the clauses incorporated into the signed contracts, etc.
The CJEU Judgment identifies in its final operative part two “particularly pertinent elements” for the national judge to assess, in each case, whether the contract of the loan subscribed by the consumer exceeds the transparency control, namely, (i) that the elements used to calculate the interest rate were “easily accessible to any person” who had the intention of formalizing a mortgage loan contract and (ii) that said interested person had been provided with sufficient information on the historical evolution of the values of the index.
The crucial question not resolved by the CJEU Judgment is what happens after the declaration of nullity of the IRPH index, placing such a decision on the Judges who in each case determine the abusiveness of the clause, stating that they may replace it with another index “in the absence of an agreement to the contrary by the parties to the contract, provided that the mortgage loan contract could not subsist after the abusive clause has been suppressed and that the cancellation of the contract in its entirety will leave”.
Consequently, the specific agreements contained in each mortgage-backed loan must be adhered to in order to know if they should be recalculated by applying the Euribor instead of the annulled IRPH or if, on the contrary, another solution must be chosen in order not to cause the undesired effect for the consumer of the cancellation of the mortgage contract and correlative early maturity of the loan.
We still do not know what the position adopted by the Spanish Courts and Tribunals will be in the face of this dilemma, but what is already known are the forecasts that the banking entities are making to provide the cost of repaying interest unduly paid by consumers, which ranges between 9,000 and 40,000 million euros in the entire sector, of which 14,000 million euros correspond only to the three main national banking entities (BBVA, SANTANDER and CAIXABANK), to which would be added BANKIA, BANCO SABADELL, KUTXA, LIBERBANK or UNICAJA, among others.
Consult the CJUE Judgment on the IRPHCJEU Judgment 03-03-2020
It may interest you:”Claim for IRPH mortgage compensation”