You are here: Home - News -

German court rules in favour of mis-led borrowers

  • 23/04/2002
  • 0
The German Federal Court has ruled to allow people to annul mortgages they have bought from doorstep...

The German Federal Court has ruled to allow people to annul mortgages they have bought from doorstep salesmen, and reclaim paid interest.

The sales practice was common in the former East Germany shortly after reunification and consumers were allowed to back out of unsolicited deals made on the doorstep if they were not tied to property.

German consumer groups had taken the case to the European Court of Justice, claiming the exception was unfair. The European Court ruled in their favour, and now the German court has agreed and ruled there is no time limit on pulling out of the deals.

Piers Brown, an analyst at Commerzbank Securities, said: ‘As it stands, there is a facility to cancel the loan agreement ‘ the customer pays back the principal and the bank pays back the interest paid. The point is that it doesn’t necessarily make sense to do that. Clients would still need to finance their property and get another mortgage. There was nothing wrong with the mortgages, it was that not all the banks made the customer aware there was a cooling off period. Also when the mortgage was started, the value assessments of the properties were in many cases far too high.’

The bank most affected by this decision, HVB, is Germany’s second-largest bank. With an estimated £8bn exposure in doorstep mortgages, HVB saw its share price fall by 3.7% on the news.


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Credit reference agencies are to appeal controversial court ruling

Credit agencies are struggling to obtain client details from the electoral roll