It's a Bad Time to Have a Home in Spain

Under Spanish law, turning over your property to the bank doesn't cancel the debt if the property is sold for less than the outstanding mortgage.
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One of the hardest issues to confront in the next Spanish elections is the housing problem. The bursting of the Spanish construction bubble in 2008 and the international economic crisis has increased it too fast for politics and people to face up. There's almost 5 million people unemployed in Spain, and with this, more financial defaulters, less credits for mortgages, evictions have doubled in the past 3 years and the people are starting to get enough.

Spaniards invest in property instead of stock. But the average age for leaving the parent's home is 30-years-old due to the fact that the youth doesn't have facilities for buying a house; there's not enough low-rent or state-subsidized houses; there isn't easy access to credit; and taking a mortgage is unthinkable with the low salaries of the inexperience or low-educated young people. The ones with a good education are looking to work abroad because of the feeling that this generation will be worse off than their parents. Without the parents help, it is hard to get enough money for a house down payment. Right now the youth unemployment rate is over 45 percent.

A 2009 UNESCO report said that Spain is at the bottom of the European list for access to housing, because the uncontrolled speculation that has taken place over the last 20 years and the large number of empty properties. Without counting those that are halfway-built, under construction, frozen, or that never got past the project or planning stage, the country has between 700,000 and 1.1 million unsold new houses. And 300,000 families evicted since 2007.

Under Spanish law, turning over your property to the bank doesn't cancel the debt if the property is sold for less than the outstanding mortgage. The bank can claim the difference from the borrower against all present and future assets and earnings.

Only in the first semester of this year, the court has evicted 32,000 families. The reasons are many but the reality is that this amount is 70 percent of the total of 2010 evictions, 94 percent of 2009's and 120 percent of the 2008's according to the General Council of Judicial Power reports. So, there's a lot of citizens included in the Asnef (an official defaulters register), who don't have a right to bank loans or credit cards, and still owe huge amounts to the banks.

Right now there's a popular request for the Goverment to take over the hundreds of thousands of empty homes throughout Spain owned by the banks, and rented out at low rates; and that the banks give borrowers the option to return their property but allow them to continue living in it paying a low-income rental.

There's other option: to just hand over their keys to the bank, and walk away. This modality, the dación de pago (payment in kind), in Spain is only possible with the lender's agreement. The Spanish Mortgage Association has said that cancelling mortgage debt by returning their homes could affect the solvency of the banks.

The successive governments' housing policies hasn't been enough and have failed to turn down the tide. The challenge for the next Prime Minister is implementing an effective housing politic that fix the urgent problem of people who can't face up the mortgages without making the bank crash. Both parties, the ruling socialist (PSOE) and right-wing Popular (PP) has presented ambiguous measures to solve the housing issue. One of the common proposals is lowering the VAT and other taxes for buying a house. But the experts suggest that the better solution is to promote the renting and the state-subsidized house for unemployed or low-rent families.

Nowadays, people who have been evicted from their homes and organizations like consumer organizations, residents associations, labour unions and the Plataforma de Afectados por las Hipotecas (PAH, spanish for Platform for those Affected by Mortgages) are systematically organizing to stop the court bailiff from evicting families who failed to keep up with the mortgage payments. They call on volunteers on the Internet to gather at a given date and time of the eviction. The word has spread. Now the citizens ask for help from the PAH when they run out of options. In this year, PAH has stopped almost 100 evictions.

Occupying a house illegally is increasing now in the big cities like Madrid or Barcelona; injected by the 15-M movement, better known as the Spanish revolution or 'Los Indignados' (spanish for the outrageds) and the growing amount of families who have lost their home. They are making a list of empty houses to okupar (spanish for squattering) as a solution for the evicted families because they don't believe the situation will change. At least in the next months.

Maryem Castillo is a student of UAM / El País Journalism School

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