An end to bank repossessions?

Spain is at a tipping point. No, not the Catalan elections, nor the abortive general strike (supposed to be soon but everyone is ignoring it). I’m talking about the desahucios, the forced evictions of ex-home owners by the banks.

Currently, if you miss just two mortgage repayments, the banks will start repossession actions. Within just a couple of months, the baliffs turn up and turf you out. The internet is full of stories of people who at the last minute scrape together the cash for the payment, only to be turned away at the bank being told that proceedings had already started.

And it’s not just your home that you lose. The banks are allowed to pursue you for the rest of the debt, plus interest, plus costs, plus this, plus that… some people end up owing 150% more than the original mortgage, as well as losing their homes and the payments they’ve made.

Justice? No, but it stopped the banks going under. As people started handing back their homes in 2007, and bankers started to realise the scale of the problem, they forced the government of Zapatero to enact harsh laws punishing anyone who dared break the terms of their mortgage agreement.

It was the PSOE who enacted the law at the start of the financial crisis, the so-called “socialist party of the people”, who enacted one of the toughest, nastiest and right-wing pieces of legislation in force in the EU today.

Ironically enough, the same party who immediatly started to call for the law to be overturned, once they were evicted.

The EU spoke out this week, saying that it considers Spanish mortgage law to be against EU principles and law, as it fails to give any protection to the owner of the mortgage.

And a national campaign to change the law is slowly gathering force. Evictions are now almost always preceeded by clashes with the police as activists attempt to stop the eviction.

And, sadly, as the recession bites, this law is starting to claim lives. Three alone this month, as people who realise that they have nothing, and must lumber the rest of their lives underneath a huge mountain of debt, decide upon the ultimate decision and quietly exit this life, stage left.

The latest was today, Amaya Egaña, a 53 year old mother and wife, who as the baliffs started to break down the door of her flat in the Basque town of Barakaldo, walked to the window of her fourth floor flat and jumped.

The Judge who attended the scene told journalists that although legally no crime had been committed, in his eyes, La Caixa (the repossessing bank) was guilty of murder.

And the worse thing is that it seems that, very soon, this law will be repealed.

You see, in most countries, if you can’t pay your mortgage repayments, the banks will take your home off you, but you aren’t liable for more than the outstanding debt. If the home is worth more than the debt, you’re in credit. If the home is worth less than the debt, the bank shouldn’t have lent you the cash in the first place.

But with the huge number of unsold homes being returned to the banks, the banks are tottering anyway. Add in a few hundred subprime mortgages, and they would collapse.

But now that we have Sareb, the “bad bank” which is buying all the empty and half built homes off the banks (nationalising them, if you will), the banks no longer need to fear massive waves of defaulting mortgage holders. They can just shrug, and pass on the debt to the State.

But in Spain, personal bankruptcy per se doesn’t exist, and as such, there is no escape from the debt.

As one elderly grandmother from Nijar discovered last year to her cost. She was the guarantor for her sons flat. When he defaulted on the mortgage, the bank took her sons flat off him, and then pursued her, as the guarantor for her sons debt. She ended up losing her flat, despite not having a mortgage on it, as she had put up for her son during the boom years. She has just been fined some 400€ for daring to make a scene in her local bank branch.

This evening, a group of senior social organisms, such as the Basque Defensor del Pueblo, have called for an immediate moratorium on all mortgage repossessions.

Let us wake up on Monday and find this order passed, until we can find a new socially just method to ensure mortgage compliance, urged Soledad Becerril.

On the 6th of November, the government passed a series of recommendations to the Defensor del Pueblo, asking for feedback on the proposed changes to the laws, including establishing personal bankruptcy.

Dacion en pago, the Spanish term for “handing the keys back to the bank” is on its way. The State will assume the cost, it has no option, as more and more Spaniards find themselves unable to finance huge mortgage costs on small flats that simply aren’t worth the money the escritura is written on.

But meanwhile, who knows how many people will simply be forced, by the massive credit institutions that have bankrupted this nation, to quietly step out of their window?

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