Evicted, in debt and unemployed – Spain’s unjust foreclosure laws

Everyone thought we had it made in the Spain of the late eighties.

These were good times (or so they seemed). Democracy found its place after decades of despotism. Cultural and sexual freedom replaced the repression and censorship of the Franco era.  Tourism flooded the Mediterranean coast land and construction boomed. Migrants soon saw an opportunity and landed in the peninsula from everywhere, South America, Northern Africa, Asia.

House prices began to multiply by two, even by three times. Every Tom, Dick and Harry (well, your average Pablo, Pedro and Pepe) was buying property and selling it for double if not triple their original price. Good times.

And the good times went on until  the late nineties and early nods, when prices sky rocketed once again.

Anyone could walk into a bank and be granted a credit, a very large credit. Even if they only had temporary work contracts. Even if they had a poor credit history. It didn’t matter, as long as they had a guarantor, the bank was eager to lend them all the money.

Little did they know the bubble they lived in, was about to burst.

And burst it did. Loudly, very loudly.

2101.02.21 010 crisis

The reasons?

Quite a few – a market that could not absorb the large amount of property built during this period; real estate offer exceeding demand; the internal decline of the Spanish economy; the collapse of an economic model based on construction; the repercussions of an international financial crisis.  And many others.

By July 2011, house prices had lost a quarter of their value since their peak in 2007.

By then, the crisis that is now causing the country to crumple, was slowly creeping in. But no one wanted to see what was coming:

“A vivir la vida que son dos días”

(let’s enjoy life because we are only here for two days).

Well, it’s not as simple as that.

Too many people; not enough jobs; too much greed; too many incompetent bureaucrats; tough, often inhumane and inappropriate austerity measures; severe cuts in social security and unemployment benefits, have left Spain bleeding and a great part of its population excluded from private and public economic circles. But I’ve said it all before. So, I won’t cry about it again.

2012.02.04 015-002

This time, though, I want to cry about something that also came about as a result of the little tale I just told and a draconian and unjust mortgage and foreclosure law. 

No, I’m not I’m not just qualifying the Spanish mortgage law as draconian and unjust simply because I’m frustrated by the state of things. Others more unbiased and knowledgeable in the matter have said that this law, particularly in reference to foreclosures inflicted on owners who can no longer afford to pay their mortgage, is not compatible with European consumer legislation. Jualiane Kokkot, attorney general of the Justice Tribunal of the EU considers Spanish law does not protect consumers against abusive clauses in mortgage contracts.

From 2007 to 2012, 400.000 persons have been evicted from their homes for not being able to pay their mortgages.

But get this: not only do these people get removed from their homes with their property ending up in the bank’s hands , but to add insult to injury, those who forfeit their payments are forced to continue paying their debts until the very last cent. Yes, I know it sounds incongruous, because if you can’t pay your monthly payments before you own the home, how can you even begin to pay them once you are on the streets? Without a job? With a family? Caring for a disabled person?

In similar cases, people in most other countries, face foreclosures and wait with despair for the eviction notice to arrive.  In Spain, that’s not the end of your troubles. The banks still want to squeeze every single cent out of you. So, not only are Spanish mortgage holders personally liable for the full amount of the loan – you also need to add penalty interest charges and tens of thousands of dollars in court fees. Bankruptcy is not the answer, either. Mortgage debt is specifically excluded here. Ada Colau, a human rights lawyer who works for Plataforma de afectados por la hipoteca, an advocacy group formed to give legal advice to homeowners and to push for reform of the country’s foreclosure laws, explains that “effectively, you can never get rid of this debt; other countries in the European Union also have personal debt mortgages, but you can go to the courts and get relief. Not in Spain.”

So, what’s the solution for people in such dramatic conditions? For many, until now, none. And sadly, this has lead to a dramatic string of suicides as people cannot find a way out of this lifelong punishment. There have been two suicides over the past few weeks, along with an unsuccessful attempt in the city of Valencia.  The latest case, reported on Friday, involved a 53-year-old woman who jumped from her sixth-story balcony in the Basque city of Barakaldo as foreclosure agents forced open her door.

Spanish banks are in dire need of cash and they insist that it is legitimate for them to try to recover their debt.  Despite a €100 billion bailout-pledge by the EU, Spanish banks are looking to strengthen their balance sheets and are doing whatever they can to extract payment from debtors.

But at what cost? 



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