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Kuria to set standards for forex mortgage trials

November 28th, 2013

It is high time for the top court, economic analysts say, to give clear directions to courts in the civil lawsuits by forex mortgage debtors against banks, yet the Kuria is not expected to scrap forex mortgage contracts or order to convert them into forint-based debt.

Discontented debtors have filed several suits against banks, charging them with deceptive language, unilateral modification of contracts and abuse of power. Most cases have been won by the banks, but not all. The government intends to legislate on the forex loan crisis, but said it needed a clear juridical context to do so and called upon the Kuria to express its view on who should bear the brunt of the changes in exchange rates and whether the banks were entitled to unilaterally adapt the interest rates to those changes. The Kuria will start deliberations on the issue in mid-December. (For more on the political context of the forex debt issue see BudaPost September 5.)

Economic analysts of azenpenzem.hu (the name translates as My Money) welcome the willingness of the Kuria to “bring order” among the mortgage lawsuits. They warn that while the plaintiff’s claims have been upheld by some first degree courts, and on two occasions, contract have even been annulled, appeal courts usually turned down the first degree verdicts or sent the cases back for re-trial. The best chance debtors have, based on the Kuria’s hints so far, is a ruling condemning banks for having raised interest rates unilaterally and picked the highest exchange rate in calculating interest, they say. Yet until the legal framework is clearly defined by the Kuria, the future of forex debt contracts remains undecided, the commentator concludes.