"Robinhoodian" courts' decisions on mortgage law in Spain

Purpose – The purpose of this paper is to examine the response of the Spanish courts to the effects of the 2007 financial crisis for residential mortgage borrowers in the absence of any equivalent intervention by the legislature. The paper also explores the potential risks that recent court decisions might pose for the Spanish mortgage and banking systems. Design/methodology/approach – The paper uses a combination of doctrinal and comparative methodology. It undertakes an analysis of decided judicial cases in Spain and compares these to international courts' decisions and to national and international legislation with a view to exploring their originality in the field of mortgage-related consumer protection. Findings – The reviewed cases demonstrate the need to consider legislative reforms to increase the protection of consumers in relation to mortgages. Some reforms took place in 2013, but these were not perceived as sufficient by the judiciary. The paper also highlights the legal uncertainty that has followed these decisions and its negative impact on the credibility of the Spanish financial and legal systems. Research limitations/implications – The cases discussed are exceptional in the context of the general “normal” or “traditional” application of contractual, procedural and mortgage legislation by the rest of the judiciary. However, they are relevant enough to detect a trend and the need for the revision of affected statutes. Originality/value – This paper provides the first systematic critical analysis of these cases. It is of particular significance, as they collectively represent a distortion of the civil law principles that provide the basis of Spanish mortgage law and, therefore, of the wider financial system.