Customers accuse banks of charging fees to cancel mortgages

Customers accuse banks of charging fees for mortgage cancellations. The complaints were received by the Portuguese Communist Party (PCP), which sent several questions to the Bank of Portugal to try to obtain clarifications on the performance of the financial institutions it supervises. For Jornal Económico (JE), the largest financial institutions guarantee that they do not charge any commission for issuing cancellations, complying with the law and the regulator’s instructions, although there are legal costs.

“Reports have reached the CPP parliamentary group of situations in which banks illegally charge amounts corresponding to the cancellation of mortgages (cancellations), apparently with the cover of the Bank of Portugal,” the party stated in the request sent to the regulator led by Mário Centeno last week, recalling that the law published in 2020, which prohibits the imposition of certain commissions on housing loans, is “very clear.”

“Credit institutions are prohibited from charging their clients any amount for the cancellation of a mortgage on a property that constitutes a real guarantee of the credit granted to that client, when that mortgage becomes unnecessary due to the client having secured the full repayment of said loan,” says the PCP, questioning Banco de Portugal regarding its understanding of the law, the number of complaints received regarding the imposition of commissions or fees related to cancellation or the number of notices sent to banks for non-compliance with the law.

Sources from the banking sector told JE that the legislation was updated last year. According to the Bank of Portugal, as of June 28, 2023, “institutions may only collect expenses related to the issuance of the declaration certifying the extinction of the debt (district) when they have submitted the consent to the deregistration of the mortgage electronically or when they have signed the deregistration document of the mortgage in the presence of a Registry Service employee when submitting the application.”

The same sources indicate that what can be collected is the cost of document authentication, a cost that the banks pass on to the client, but it is not a commission. Not all financial institutions charge this amount. The official BPI source states that “in compliance with current legal regulations, Banco BPI does not charge any commissions for the issuance of mortgage cancellations offered as credit guarantee to consumers, specifically in the context of housing credit, nor even the value of the expenses incurred by the bank with the authentication of the cancellation document.”

Santander told JE that it “does not charge clients any cost for issuing the cancellation.” Its price list indicates that clients are exempt, “without prejudice to the client’s bearing of the expenses incurred by the bank from third parties, on behalf of the client, in cases of electronic filing of the document containing the bank’s consent to cancel the mortgage registration of which the client has been previously informed.”

The same thing happens at Caixa, which guarantees that it “does not charge mortgage cancellation fees to its clients”. Novobanco also says that it “does not charge any commission for issuing the mortgage cancellation document (“Distrate”), in strict compliance with the provisions of Decree-Law No. 74-A/2017, of June 23, as well as the guidelines of the regulatory authority”. A position shared by BCP. An official source from the bank stated that it “does not charge commissions for mortgage cancellations (cancellations), and strictly adheres to the instructions of the Bank of Portugal in this regard as well as in all matters”. When contacted, the Bank of Portugal declined to comment.

“The banks state that the expenses imposed relate to the cost of certifying the duration of the cancellation of the mortgage, which is already foreseen in their price lists. They also state that these costs do not constitute an interest for the bank, since they arise from a cost linked to the formalization of the cancellation,” say the MPs of the Popular Communist Party, pointing out, however, that “the recognition of the signature can be guaranteed by any of the many lawyers working in the banking sector, as representatives of the bank in question.” For the party, it is “an unacceptable abuse of power by banks towards their clients, whether individuals or companies, as has been repeated in recent years.”