The EU Court of Justice responded yesterday to a question posed by a Sabadell judge about eviction proceedings. The sentence did not follow Spanish mortgage law because that is not the issue at hand. The response will affect legal procedure and abusive clauses in mortgage contracts.
It is thought that the Spanish law goes against EU law by not allowing the judge to adopt preventative measures and, especially, by not having the ability to stall an eviction if it is found that the mortgage contract contains unfair or abusive clauses inserted by the lending back. So the Court of Justice has now provided Spanish judges with the option to terminate an eviction proceeding. This is a sweeping change of legal procedure, because it underlies the root of a problem that has plagued Spanish society: consumers are not protected from abusive practices used by financial institutions. Until now, abusive clauses have been prevalent in mortgages. For example, 20% interest rates on delayed payments. Homeowners can quickly end up on the street after an unexpected job loss. The only thing they could get previously was a new trial or a new judge, but they were never able to recover their property.
In addition to the corruption and uncontrolled growth of a near-term economic model that fails to see the future, the housing boom forced unfair terms on many home buyers. The government could have pushed a change in legal procedures that gave judges the ability to stall evictions in certain cases. But it didn't, which shows that it was not willing to stop the eviction crisis or that it can't fight pressures to not do something.
