Opposition LMP calls for a review of FX loans in light of Europe’s top court rulings
The opposition LMP party has called for a review of forex loan contracts and a recalculation of debts held by Hungarian borrowers in light of two rulings by Europe’s top court.
Speaking at a press conference, Antal Csárdi, LMP‘s deputy group leader, cited a March 14 ruling by the Court of Justice of the European Union (CJEU) that Hungarian laws should allow the cancellation of FX loan contracts if the contract includes an unfair provision relating to exchange-rate risk. In 2014, the Hungarian parliament passed several laws designed to amend unfair terms of FX loan contracts on which repayments skyrocketed when the forint plummeted during the 2008 financial crisis. However, the exchange-rate risk remained a risk borne by the borrower.
Hungarian laws have so far prohibited retroactive cancellation of contracts by the loan holder on the ground of unfair terns in the contract. In its ruling, the CJEU said contracts containing such unfair terms should be allowed to “be cancelled in its entirety if it cannot continue to exist without that term”. “It follows that, on those points, the 2014 [Hungarian] laws are not compatible with the requirements of the directive,” the ruling said.
Csárdi said the CJEU’s ruling “goes to show” that the government had sought to resolve the issue of FX loans with legislation that “flies in the face of EU law”. Laws passed in Hungary “represented the interests of the banks” and allowed the opportunity “to exit the debt problem under acceptable terms” to an only very small group of borrowers, he said. In its ruling last September, the CJEU stated that “the unfairness of an unclear contractual term which places the exchange rate risk on the borrower and does not reflect statutory provisions may be subject to judicial review.”
Csárdi called on the government to move without delay to recalculate loans banks “forced on to borrowers unfairly” and suspend the eviction of tenants struggling with their mortgage payments until the matter is settled.