Expats in Cyprus win settlement in mortgage misselling scandal

Published:  1 Jul at 6 PM
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The ongoing scandal concerning mis-sold mortgages on expat homes in Cyprus has affected thousands of property owners on the island, but now looks as if it’s coming to an end.

Rather than risk a UK High Court judgment against them, the Cypriot Alpha Bank and a consortium of 20 property developers have settled all claims. The good news came just a day before the court hearing was due to begin, leaving the thousands of expats terrified of losing their homes hoping the nightmare is over.

According to lawyers, part of the settlement forbids either side in the dispute from disclosing the terms agreed, but it’s common knowledge that the allegations centred on lenders providing Swiss franc mortgages for home purchases. The loans were pushed to expats by financial advisors on the grounds of competitive exchange rates and low interest charges.

The scheme began to unravel once Cypriot property prices tumbled and the Swiss franc moved upwards against the euro. Soon, mortgage borrowers were facing negative equity, soaring monthly payments and threats by the bank of repossession and bankruptcy.

Fears grew in the expat community that a legal agreement between the UK and Cyprus might give the bank the right to seek debt restitution via overseas assets including British homes. Most mortgagees found it impossible to either rent or sell their Cyprus properties.

Their case hinged on the total lack of information given by financial advisors on currency fluctuation and its possible consequences at the point of taking on the mortgages. Lawyers for the 100 in the class action were about to state that their clients had been misled by estate agents, developers and lawyers and that the loans were mis-sold by the bank.

The result gives hope to thousands more UK expats in Cyprus affected by the mis-selling, many of whom are awaiting similar court cases. According to a lawyer representing the first group’s High Court case, in spite of few details having been released, the settlement is a cause for hope.
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