They are not beggars, or junkies, or “undocumented” immigrants. They are the “homeless”, and they are spreading like wildfire throughout the Spanish landscape. They have lost their jobs, their house, their furniture, their illusions, their hope. Instead, they live with a debt clinging to their ankles, one that will drag along after them for the rest of their lives.
Paradoxical as it may seem, the worst is not to be without a home, but what comes after the foreclosure. “I’m condemned for life to have no property in my name. I cannot collect a salary, or have a telephone contract, or buy a car, or pay rent if I don’t want them to come after me for the debt”, laments Elena Parrondo, sitting next to her husband in their flat in the Madrid suburb of Meco that they’re about to lose.
The only crime this middle-class couple have committed is to become unemployed. Her husband had a good salary in a construction job, but was dismissed in November 2010. Then came the day when this 42-year-old woman, unable to feed her four children, took a difficult decision: to stop paying the mortgage.
“On February 11, I didn’t even have the money to buy bread. With the €1,000 in unemployment benefits, we couldn’t afford the mortgage on the flat, which was €680. We weighed it up very carefully, and stopped paying the bill,” she explains, not with aplomb. Her attempts to renegotiate with the bank failed. Since then, she’s been living with an eviction order hanging over her head.
Condemned to social exclusion
“It’s not something to be relished – being put out into the street with two young children. If we don’t pay the mortgage it’s not because we don’t feel like it, but because we can’t. The banks should be more aware of families’ situations. They’re being left with thousands of homes that remain unoccupied after the foreclosure,” Elena insists.
The Plataforma de Afectados por la Hipoteca (Platform of Those Affected by a Mortgage) decries a system that condemns thousands of families to marginalisation and social exclusion. “There was reckless risk management by the banks, which created for the debtor the illusion that with such an asset, he was going to be able to handle the liability for the loan,” says Rafael Mayoral, legal adviser for the Platform.
When you stop payments on a mortgage, the property goes up for auction at the valuation listed in the deed. In most cases, these auctions find no buyers because the price cannot fall below 70 percent of the value of the mortgaged property in the first auction or below 60 percent in the second, at which point the bank can add the property to its own assets. It thus acquires the property, and the bank pursues the rest of the debt.
In many cases, the final debt of the debtor exceeds the initial debt, even though he no longer owns the property: “They’ll keep coming after us and our guarantors for the debt for the rest of our days. The supposed solvency of the Spanish financial system constitutes, at bottom, the slavery of the debtor vis-a-via the financial agency, since we’re going to be held liable, through our present and future assets, for the rest of our days,” argues Mayoral.
Banks aren’t satisfied either with the situation, since it’s not their business to keep real estate assets on their books. “For a bank, responsibility number one is to recover the loan, because that loan is given out from money left by other depositors. We didn’t foresee that people wouldn’t repay the loans,” says a spokesman for one bank.
Lino Samuel Moreno has suffered deeply from the auction of his home. His property went up in smoke, along with his dream of living in Spain, the ‘European Eldorado’. Coming here from Ecuador, he never thought that his dream would become a living nightmare. He arrived around 2002, and in 2006, with all his papers in order, he decided to take the plunge and buy a flat in the Madrid suburb of Valdemoro.
“There must be compensation for the victims”
Everything went smoothly until he lost his job in 2008. Since then he hasn’t managed to find work for more than four months at a time. The first monthly payment that year went unpaid, then the second, then the third... He tried to renegotiate the payment, but in vain. On October 7 of last year, the dreaded court order to vacate the flat arrived.
“At 10 a.m., the police showed up to tell us to leave. I embraced my wife. At that moment we got a call from the court telling us we had been granted an extension of three months – but we no longer had any furniture,” Lino adds, his voice quivering. He now lives in a rented house in Valdemoro, thanks to the City Council, and pays 450 euros a month for it.
There are many thousands of cases like his. At the Plataforma de Afectados por la Hipoteca, they believe a situation of total impunity has developed, and they’re demanding an investigation into the ways banks offer mortgages and draw up contracts, which, in their judgement, sometimes verge on a scam.
“Mortgage loans have been the lever to artificially jack up the price of that basic asset which is housing, and for that they bear some responsibility. There must be compensation for the victims, and not the other way around. We are asking for an amendment to the mortgage laws to allow the property to be handed back in exchange for the debt, and that this be written off the books for once and for all,” Rafael Mayoral explains.