CHF mortgage cases overrunning court: daily

The number of cases challenging the fitness of mortgage contracts indexed in Swiss Francs (CHF) is “four times higher than last year” according to a senior judge.

The number of cases contesting Swiss Franc mortgages “has risen 411 percent in the Wrocław Regional Court, compared to the same time last year,” according to the court chairman Wojciech Łukowski.

Cases against banks lending in CHF now account for half of all civil cases in the court. Last year there were 284 such cases in Wrocław. This year already there have been 1,203. Warsaw, Poznań and Kraków courts are also seeing caseloads doubling or tripling, according to an article in Rzeczpospolita daily.

The case of the Dziubak family’s mortgage agreement with Raiffeisen bank, which was indexed in Swiss francs made headlines in October last year. The European Court of Justice cleared the way for Polish courts to rule on the validity or otherwise of cases borrowers brought against banks alleging unfair terms and conditions.

The family borrowed PLN 400,000 (EUR 94,000) in 2008 but before the case owed roughly the equivalent of PLN 500,000 (EUR 118,000), despite making 10 years of repayments because of the rise in the value of the Swiss franc and unfair conditions.

The case was thought last year to have opened the floodgates for up to 600,000 borrowers to take banks to court.

The Luxembourg court’s advice on the case was that if the terms of the agreement were deemed unfair the agreement was not valid. Examples of abuse included insistence on large spreads on exchanging foreign currency and timing the exchange to maximise the benefit for the bank.

The court advice did not, however, outlaw lending in foreign currency and statistics show verdicts are not always going the plaintiff’s way. Hence banks are often appealing each case, adding to the caseload of the courts.

Some court officials are calling for legislation to make mediation prior to court proceedings obligatory in order to cut down the caseload and speed up verdicts, the Rzeczpospolita article says.

The alternative is a change in the law on currency loans, which would put an end to court cases, which will swell even further.

Attempts at legislating on the issue has proved a minefield however. The bill proposed by President Andrzej Duda during his first term in office led to heated discussions with banks, who feared heavy losses if the loans were simply translated into zlotys at the rate of exchange they were originally issued at.

The bulk of the loans were contracted at the height of the property bubble in 2007-2008, when the PLN:CHF rate was as low as 2.08. Today the rate is 4.27.

While there were some horrendous cases of people losing their homes, banks claim that CHF loans are now among the safest in their portfolio, with fewer defaults than in the case of normal złoty loans.