Polish Supreme Court hearing on Swiss franc mortgages postponed
The Supreme Court of Poland has postponed until May 11 a meeting on mortgage loans denominated in Swiss francs initially scheduled for today. The meeting
The Supreme Court of Poland has postponed until May 11 a meeting on mortgage loans denominated in Swiss francs initially scheduled for today.
The meeting was to provide guidance on how Polish lower courts should adjudicate franc-backed mortgage disputes between Polish banks and borrowers. More than twenty percent of Polish borrowers have mortgage loans guaranteed in francs, as the loans initially carried interest rates lower than those guaranteed by the Polish zloty. However, the appreciation of the franc over the past decade – along with the decline of the zloty – has left many borrowers in Poland unable to meet their debt service obligations. At the end of 2019, the court ruled that borrowers could request a conversion of foreign currency loans into zloty. Still, lower court rulings have favored lenders, who argue that converting the $ 32 billion into secured mortgage loans in francs could hurt Poland’s financial sector.
Expect Poland’s Supreme Court to guide lower courts in deciding borrowers in franc-backed debt cases, as Poland must implement a 2019 European Court of Justice ruling allowing conversion requests . In addition, although the Polish government has expressed its willingness to support the banks throughout the conversion process, frustrated by the failure of negotiations to settle the dispute, Polish officials have indicated that bailouts are unlikely.
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