Cancellation of an 85-Year-Old Client’s Reverse Mortgage Deemed “Illogical, Unnecessary, and Unjustified”

A reverse mortgage granted by BBVA in 2008 to an 85-year-old client in Tenerife has been voided by a court due to the lack of valid consent from the client, who has since passed away. The client had no financial difficulties, did not require additional income, making the mortgage unnecessary.

The judge from Court of First Instance number 4 in La Orotava underscored the perplexing nature of the reverse mortgage agreement given the client’s personal circumstances, suggesting it is hard to justify the decision made in the context of 2008 and 2009.

During that period, the judge noted a surge in dubious contracts facilitated by banking entities in collusion with notaries and registrars, taking advantage of vulnerable clients and breaching their trust.

These practices endangered the financial stability of clients and their heirs, with no tangible economic benefits from such agreements, as evident in this specific case.

The reverse mortgage amount was €120,000, typical of such agreements, designed for individuals over 65 or with a disability exceeding 33%, using their home as collateral to secure a loan that can be withdrawn in a lump sum or monthly payments, with applicable interest.

The judge deemed the individual contracting the mortgage, an 85-year-old woman with limited education and no financial acumen, owning multiple properties and receiving ample pension, as having an inexplicable need for such a contract.

Furthermore, the magistrate highlighted the lack of evidence showing necessity for the contract to address personal or familial financial difficulties, therefore casting doubt on the validity of the agreement.

As the financial institution failed to provide proof of pre-contractual information and adequate advice to the client, the judge ruled the consent invalid, annulling the agreement and ordering the bank to compensate the heirs with nearly €44,000.

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