Cyprus Swiss Franc Mortgage Scandal Court Challenge

Thousands of expats and second homers who bought property in Cyprus with a Swiss Franc mortgage are facing a crackdown by banks demanding their money back.

Many are mounting legal challenges to argue they did not know about the mortgages or the risks involved.

Those with homes in Britain are facing court action and risk losing their properties on the Mediterranean island and in the UK if they lose.

Lawyers estimate between 20,000 and 30,000 Cyprus properties are involved in the Swiss Franc mortgage scandal. The value of properties involved runs into millions of pounds.

Expats take on the banks

The owners of the Cyprus properties hedged their mortgage risk with Swiss Franc loans – but in the years since they took out their borrowing, the euro has collapsed thrusting the Cypriot economy into meltdown while the Swiss Franc has grown in strength.

That means the mortgages owed by many are considerably larger than the value of their homes – and their debt is growing with interest penalties and legal costs.

Banks are demanding their money back and homeowners are counter-claiming.

Now, 200 expats and second home owners are mounting a legal challenge against the banks in the Cyprus courts. The cases are listed for October.

Lawyers claim Cypriot and Greek banks did not explain the terms of the mortgage deals or how the Swiss Franc hedging worked – nor the risks could this engender if the value of the franc rose against the euro as it has done.

Flawed advice claim

Some expats won the right to hear the case in London, but lawyers fear if they pursue the action in the UK, they may face a double set of legal costs if the banks start a counter action in Cyprus.

“Local financial advisers and property agents in Britain worked with the developers to make a ‘one stop shop’ for clients to invest in Cyprus properties,” said lawyer Stylianos Christoforou. “In most cases, the clients never visited Cyprus and only saw the property they were buying on paper as an off-plan development until building finished and they were handed the keys.

“The case is not that there was misselling, but the property transfers and mortgages were not properly explained or managed, so the contracts are void. “

Christoforou explained that clients did not have anyone certify their signatures when they passed power of attorney, which means that any action taken by someone under that power was improper.

Stay Connected

Latest News

Economic Impact Payments for US Expats

The US government is paying millions of dollars into the bank accounts of American expats as coronavirus economic impact payments and this guide will...

HMRC Explained

HMRC is short for Her Majesty’s Revenue and Customs. The HMRC collects the taxes and customs duties that the British government spends...

Difference Between Residence and Domicile

For British expats, their residence and domicile determine how much tax they are likely to pay, both in the country where they...

QROPS, Qualifying Recognised Overseas Pension Scheme

QROPS is a type of pensions that were designed to cater for the needs of British pension holders that move out of...

Where Do British Expats Live?

More than 5.5 million people from Britain live overseas and leave the country at a rate of around 2,000 a week.

Living In The Philippines, A Guide for Expats

Brilliant weather, a low cost of living and friendly, English speaking people makes The Philippines a popular destination for British expats.

LEAVE A REPLY

Please enter your comment!
Please enter your name here