Spain moves to curb evictions of most vulnerable

Spain passes decree to curb evictions of most needy as protests mount

Associated Press
Spain halts evictions for the needy after suicides
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File - In this Nov. 18, 2011file photo, Azucena Paredes' grandmother Tomasa Morcillo, 87, picks up her personal belongings as she and her family are evicted from their home in Madrid. The Spanish government Thursday Nov. 15, 2012 passed a decree curbing evictions of lower income homeowners unable to pay their mortgage, a bid to ease a trend that has seen hundreds of thousands of people lose their homes because of the brutal economic crisis. The urgent measure stops evictions for two years of people whose unemployed benefits have expired or who have incomes of less than €1,200 ($1,527) a month after tax and whose mortgage represents at least 50 percent total household income. Public attention on the issue intensified greatly in recent weeks after two homeowners facing eviction committed suicide. Spaniards are also angry because while people lose their homes, the government is negotiation billion-dollar bailouts for the same banks who are repossessing the houses. Over the past four years, social groups have begun organizing street protests to try to avoid prevent court officials and police carrying out eviction orders. (AP Photo/Arturo Rodriguez, File)

MADRID (AP) -- The Spanish government on Thursday passed a decree suspending evictions of the most vulnerable homeowners unable to pay their mortgage, a bid to ease a trend that has seen hundreds of thousands of people lose their homes because of the brutal economic crisis.

Evictions have become one of the most sensitive topics in the country's financial drama, particularly in recent weeks after two homeowners facing such a fate committed suicide.

The financial crisis caused the property market to collapse in 2008 after a decade-long boom. Since then, unemployment has been swelling and currently claims one in four workers. Prospects are grim, with the economy expected to slide for another year.

The government, which is still preparing a broader overhaul of the country's mortgage and property laws, said that with Thursday's decree it hoped to shield the most in need.

"We must avoid families ending up in the street as a consequence of the crisis," Economy Minister Luis de Guindos said at a press conference. "What we're trying to do here is make sure nobody ends up without their house."

The decree suspends evictions for two years of people whose unemployed benefits have expired or who have monthly incomes of less than €1,200 ($1,527) after tax and whose mortgage represents at least 50 percent of total household income.

The measure applies only to those who, on top of these conditions, have more than three children or children under three years of age. Those with elderly or certain types of disabled people dependent on them would also qualify, as would single parents with two kids and victims of domestic violence.

The decree does not change the existing mortgage law, but rather suspends its execution. Homeowners who qualify for the exemption would be able to stay in their houses for two years at no cost.

Part of the problem is that mortgage laws in Spain are particularly harsh. People unable to make monthly mortgage payments may be evicted but remain liable to repay whatever value is left on the mortgage. By comparison, people in the United States who default can return the keys to the bank and walk away from their debt.

Judges have issued more than 371,000 eviction orders for people holding mortgages for residences and land since 2008.

Public anger over evictions has also been compounded by the fact that, while people lose their homes, the government is negotiating billion-dollar bailouts for the same banks who are repossessing the houses.

Over the past four years, social groups have begun organizing street protests to try to avoid prevent court officials and police carrying out eviction orders.

In recent weeks, Spain's General Council of the Judiciary, a police union and opposition parties have all come out to demand new legislation to end the widespread evictions.

The Bank of Spain says there are now €19.1 billion worth of mortgages under threat of not being paid, up from €4.1 billion in 2007 before the crisis hit.

Spanish banks have warned against letting any new measures open the door to more people defaulting because they feel protected, but De Guindos said he did not expect this to happen. He did not give an estimate for the amount of people likely to benefit from the eviction decree.

He noted that while some people are losing their homes, Spain has 700,000 empty houses whose owners cannot find buyers, chiefly because banks are reluctant to give loans and people are afraid of buying into real estate after the crash.

Deputy Prime Minister Soraya Saenz de Santamaria said the government also passed legislation that will provide cheap rental accommodation for those who have already lost their homes.

She said the government would also move to reform a Code of Good Practices on evictions agreed with the banking sector in March.

The code in theory provides protection for homeowners in some cases, such as those where all family members are out of work and have to set aside over 60 percent of their resources to pay their mortgage.

The conservative government will continue talks this week with the leading Socialist opposition party on a lasting overhaul of the country's mortgage law.

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