Page - 112 - in Austrian Law Journal, Volume 1/2019

ALJ 2019 Wolfgang Faber/Claes Martinson 112 problem could occur if any of the possible solutions to the ‘real issue’ could cause unexpected major losses for the banking industry at large. However, since the bank, in a setting like the Banco Santander case, would at least retain a proprietary security right for the same claim it originally had, we assume that no such major consequences are to be anticipated in this regard. (v) Another assumption on risk concerns the security object. If a judicial review of potentially unfair terms is declared still possible or even necessary, the bank faces an additional risk that the apartment may deteriorate in value because of the simple fact that it is used every day and this causes wear and tear. This consequence, in principle, is very likely to occur. However, there is no equally tenable prognosis on how significant such deterioration would probably be. On the one hand, one could have reasons to assume that the consumer, if she is allowed to remain in the apartment, would take reasonable care of it. On the other hand, there may be reasons to assume, and even certain empiric support, that a person in economic distress is more likely to take bigger risks;103 this might also affect the state of the apartment. Evidently, this makes it difficult to find an appropriate way of how to measure such (partly contradictory) assumptions. In a practical case before a (national) court, it may sometimes be possible to deliver particular evidence to make an assumption more specific or clarify its likelihood. After all, deciding the ‘real issue’ in terms of excluding any further mortgage contract review right away appears to be slightly preferable to the bank. However, the bank’s main interest of at least keeping some sort of proprietary security for its claim is also served if the opposite decision were made. The economic value of the security may be somewhat lower, depending on further wear and tear. Further, the real estate market may develop in one or the other direction. (vi) It should be kept in mind that the effect that a consumer who cannot pay will lose the object over which the security right has been created, is not unfair as such. The consumer’s interest of keeping his or her home is, however, not the only interest the consumer typically has.104 In case this goal cannot be achieved, a consumer, in the capacity of debtor and mortgagor, has an evident interest of achieving the best possible economic result once the apartment is lost. In the present case, this would mean achieving a better result than 60% of the (former) market value. Theoretically, this could be attained in different ways, including: retrospectively avoiding the forced sale and enforcing the mortgage under the ordinary judicial enforcement procedure (at a time when prices may have started to go up again after the financial crisis) or, if the bank is allowed to keep the apartment, by imposing on the bank an obligation to deduct any income gained from the apartment (by way of sale or renting out to a third person) from the consumer’s remaining credit obligation. (vii) Other arguments concerning the sale of the security object have to do with assumptions on how banks will act if they are still subject to an ex officio intervention by the court in the process of evacuation. Would banks then change their behaviour and never buy the mortgaged property themselves? Is it possible to assume that excluding banks from the market would lead to a less favourable outcome for the consumer, since the prices fall if there is one buyer less on the market? Would the banks instead use partner enterprises, who they ask to buy the security object? Would the possibility of ex officio interventions affect the interest in and incentive for special 103 See, e.g., REINHARD H. SCHMIDT, ÖKONOMISCHE ANALYSE DES INSOLVENZRECHTS 27 (1980). 104 This aspect has already been touched supra, III.B. What we add here are more detailed deliberations as to the consumer’s interest to achieve the best economic result if the credit debt cannot be paid.