BANKING AND FINANCE | The Italian Supreme Court on mortgage claw-back

Newsletter n. 89 – Ottobre 2023

BANKING AND FINANCE

The Italian Supreme Court on mortgage claw-back

On 26 July 2023, the Italian Supreme Court issued its judgment in case No. 22563/2023 upholding the principle pursuant to which a mortgage can be clawed back even if granted to secure a mortgage loan (mutuo fondiario), when the proceeds of the mortgage loan are used to repay the exposure of the borrower’s bank account towards the bank as part of a transaction meant to reduce such exposure. The Italian Supreme Court further clarified that, since this transaction involves a non-ordinary satisfaction of the payment obligation, the loan loses its qualification as a mortgage loan (mutuo fondiario) and consequently the mortgage cannot benefit from the exemption against claw-back actions provided by Article 39.4 of the Italian Consolidated Banking Act.