In an unprecedented move, the Magistrate’s Court of Athens moved to stop the arbitrary and abusive practices of a loan management company at the expense of a borrower subject to the Katsel Act. He asked the prosecutor to investigate should the servicer be prosecuted? for usury.
This is one of the countless cases, as lawyers say, when s servicers apply court orders as they see fit and Law 3869/2010 (Katseli Law), with the aim of “inflating” the shares that debtors are obliged to pay to save their main residence from auction.
In this case, the debtor was subject to the beneficial provisions of the law from 2018, and the court made a decision about the monthly payments that he is obliged to pay to save his place of residence.
In accordance with the law, the court provided in its decision that the creditor calculates the interest on the monthly repayment amount. Nevertheless, the servicer insisted that the settlement be made on the basis of the then outstanding capital loan amount, causing excessive monthly payments.
Unlawful practices
The debtor again appealed to the Court of Cassation, asking to continue the interpretation of the decision to find out how interest should be calculated.
By decision 331/2024, the Magistrate’s Court of Athens refused to review and interpret the previous decision, as it considered that it was absolutely clear about the calculation of interest.
The Magistrate’s Court found the following illegal actions.
- Percentage calculation method compound interest, in violation of the law and decree.
- Collection experience excessive interest which is usury.
- After the transfer of claims, sudden and systematic use of another method of calculation by creditors in order to collect illegal amounts (s.b.. this is the transfer of credit from the bank to the fund represented by the servicer).
- Unlawful use of personal data debtors by management and collection companies without their consent.
The court rejected the petition for interpretation as groundless, because, as mentioned above, it considered the original of the decision to be quite clear and ordered to send copies of the decision, application, protocols and recommendations of the parties to K. Prosecutor and Personal Data Protection Authority for further investigation of detected illegal and criminal acts.
A message to the outlaws
As lawyers have commented, the Justice’s unprecedentedly tough stance in this case reflects the fact that servicers have become a widespread abusive practice of “inflating” payments to borrowers covered by the Katsel Act. Their obvious purpose collect more interest than the law allows and the corresponding judicial decisions, all of which without exception adopt the same method of calculation.
Not only that, but servicers, as in this particular case, adopt aggressive tactics to pressure debtors to force them to pay excessive interest;
. As lawyers say, it is now very likely that after a criminal case is brought, and even at the unusual initiative of a magistrates’ court, Justice will send a clear message to officers to review their abusive practices to avoid prosecution.