Member activity
Spain: Survey reveals a significant lack of transparency among mortgage providers
07 Dec 2011
A consumer survey in Spain has revealed a lack of
clarity from mortgage lenders is creating worrying levels of
misunderstanding among borrowers.
Consumers International member organisation
FACUA (Consumers in Action) carried out the nationwide survey
to gauge the information available to and the conditions imposed on
consumers by providers of financial services when signing
mortgage loan deals.
Lack of transparency
FACUA gathered data on 3,252 mortgage payers in September and
October 2011 and revealed a huge lack of transparency in the
information offered by the banks about the conditions of their
loans.
Costs not known
Forty per cent of those surveyed said that they did not receive
detailed information about the rates applicable before applying for
a mortgage loan.
An even higher percentage, 55%, were not even informed about the
costs and commissions applicable, previous to signing.
In Spain, lender are legally bound to allow borrower to cancel a
mortgage loan with advanced notice, either partially or completely.
Two out of five borrowerss were not aware of the existence of a
cancellation process, or were unclear about the commission applied
to such a service.
The area that consumers reported as having the worst level of
clarity and information available prior to signing - no less than
73% - relates to accessory obligations imposed by banks when a
mortgage loan is contracted.
Defaulting on a mortgage
Elsewhere, 84% of participants claimed they would not know what
to do if faced with a situation in which it became difficult or
impossible to pay their mortgage.
Eighty six per cent of mortgage borrowers were not informed by
their bank or building society about their right to choose a notary
for the formalisation of the loan in a mortgage deed.
Ninety five per cent of borrowers said it was not made clear to
them that the deeds would be available in the notary office for
them to examine, from three days prior to signing.
Likewise, eight out of ten borrowers did not know what the
mortgage liability was (83%) and how much it would amount to
(86%).
Obligated to buy related products
Eighty eight percent of participants were made to buy insurance
related to their mortgage so that the offered conditions could be
applied. This included life insurance, home insurance, funeral
insurance and rent guarantee insurance.
Having to take up a savings or pension plan is an imposition on
20% of borrowers. The imposition of a credit card, 38%. And the
direct deposit of salary and receiving of provisions into an
account, 66%.
Similarly, 16% had to contract a financial service linked to the
loan. FACUA believes that these products are very confusing and
unclear and could represent a genuine defrauding, and so are being
subject to numerous judicial inquiries against them.