Investors, who have Polish mortgages in Swiss francs (CHF) in Poland, may have had a few sleepless nights recently.

The weak Polish zloty combined with falling property prices translates into LTVs often exceeding the value of the property, which in the long-term (and mortgages are long-term loans) may not have any significance, but in the present can create quite a headache.

The threat is that the majority of the mortgage contracts have a clause saying that if the value of mortgage collateral or the property's value falls dramatically, the bank has a right to ask for additional collateral or change the currency of the loan.

While there's really nothing a mortgagee can do about it, banks have been at pains to point out that, in reality, so long as repayments are not made on time, they won't execute the clause.

But this week we've seen this unwritten agreement between banks and clients has been broken.

There's evidence that so far three banks (Polbank, Noble Bank/ Metrobank and Santander) have been asking clients paying on time to re-negotiate contracts.

This has taken various forms: from asking for another property to be pledged, a higher margin on a loan by 0.5%, additional insurance of the loan, to immediate re-payment of the amount of money that exceeds the value of the property.

If a client doesn't accept the new requirements, banks threaten to end a contract.

And, while it appears that banks are executing their rights stated in contracts, if we take a closer look, it appears that banks are trying to take advantage of clients and use exchange rates fluctuations as an excuse.

The clause in these contracts was actually designed to relate to a dramatic fall in the value of property, something that hasn't happened. In addition, with off plan units, finish adds significant value, which is always taken into account by property valuers.

So, these clauses are now being invoked in relation to a fall in the value of the PLN in relation to CHF, rather than anything to do with the declining value of property.

The Financial Controlling Commission (KNF), regulatory and supervisory body, clearly states that a decline of mortgage collateral doesn't mean that a client's creditworthiness has dropped.

The body is defending CHF mortgagees and has said that banks should not be using CHF exchange rates to increase the cost of mortgages. KNF warns banks that such requirements could be seen as bad risk management and force the KNF to take action against banks.

The view expressed by KNF is shared by the Office of Competition and Consumer Protection (UOKiK), which is taking BRE Bank to court. UOKiK questions some clauses in mortgage contracts that state that the bank can change some terms and conditions and require clients to inform banks about any changes in their financial situation.

UOKiK says that it will take more banks to court before Easter, but doesn't say which banks are on its list.

The fast and prompt response from controlling bodies is good news for those people who were or will be asked to re-negotiate mortgage contracts. It seems that at the moment, the reaction from KNF and UOKiK is the best card that could be played in talks with banks.

But what should an investor do if they find a bank is making such a request?

Firstly, check contracts to see on what basis a bank is demanding changes. Secondly, a client should demand a new property valuation from the bank or hire a valuer on their own. Anyone who bought off-plan should produce the bills they paid for finishing an apartment.

It doesn't appear that this saga is about to be concluded, so we'll keep you posted as the situation develops.