Wednesday, February 26, 2020

Cyprus Expats Win Mortgage Misselling Battle

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Thousands of British property owners with homes in Cyprus are hoping to end mortgage misselling claims after Alpha Bank Cyprus and a consortium of property professionals settled at the eleventh hour.

The bank, property developers, lawyers and estate agents were due before the High Court, London, to face the misselling claims from a group of property owners.

The day before the hearing, the claims were settled and the legal challenger withdrawn.

As part of the settlement, neither side will discuss the terms of the agreement, but the move gives hope to thousands of other property owners on the Mediterranean island in danger of losing their homes.

The allegations revolve around lenders providing mortgages in Swiss Francs to finance the purchase of homes or holiday homes.

Plunging property prices

Advisers suggested the Swiss Franc loans as interest rates were low and the exchange rate against the euro and pound was competitive.

Then the property prices plunged in Cyprus following the island’s economic troubles.

The value of the Swiss Franc rapidly climbed against the euro, leaving mortgage borrowers facing increased repayments, negative equity and threats of repossession and bankruptcy.

Many British homeowners could not sell or rent their properties and feared that a legal agreement between Cyprus and the UK might mean their debts overseas were enforceable against any British assets.

They claimed they were given little or no advice about the financial consequences of a rising Swiss Franc and that the bank, developers, lawyers and estate agents missold them the loans.

The settlement is believed to end the dispute between 100 British claimants with homes in Cyprus against Alpha Bank Cyprus and around 20 property professionals on the island.

Hope for thousands of expats

Lawyers in Britain representing homeowners in Cyprus suggest that proceedings are started in the UK rather than Cyprus as the courts process cases faster.

“These claims were settled favourably for our clients,” said one lawyer involved in the High Court case.

“The banks involved in this wanted the cases heard in Cyprus, but are concerned that the outcome will be less likely to end in their favour in the UK and do not want their reputations sullied.”

Other groups of British homeowners in Cyprus have been fighting to hold on to their properties for more than three years. They are also alleging misselling of Swiss Franc loans.

“Although the details are sparse, this settlement gives hope to thousands more borrowers worrying about their properties and finances,” said the lawyer.

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