Mortgages for life

Between the two, they would get enough to easily take over the 250,000-euro mortgage that the bank had given them. But with the crisis came the problems: her income dropped, and her husband, who worked as a self-employed worker, found it difficult to face the expenses that working on his own account entails. “A ruin,” Dolores laments. They began to accumulate debts, but they did not stop paying the mortgage until they had no choice. “Before eating, many families spend the little they spend on maintaining their home, it’s the last thing they stop paying. No one wants to leave home, “says Ada Colau, president of the Platform for People Affected by Mortgages (PAH).

Cases like that of the Dolores family are increasingly frequent in Spain. According to the General Council of the Judiciary, until the end of 2011, there were 212 foreclosures daily, a figure that passed, earlier this year, to 517. Since 2007, 400,000 families have stopped facing mortgage loans and have been evicted. The majority has some autonomous member, mortgage guarantor or a worker in the construction sector. 65% are Spaniards of origin.

Dolores and her husband bought their apartment in the real estate bubble. In 2005, Spain built more homes than the Netherlands, Germany, and France combined. It was a time of apparent prosperity, although not without contradictions: unemployment had fallen in a decade from 22.9% to 9.2% and, according to the National Institute of Statistics, the average price of housing had doubled, but the average salary had frozen in 1997 at 1,200 euros.

Everything favored the purchase of a home

Everything favored the purchase of a home

 

says Gonzalo Bernardos, Vice Chancellor of the University of Barcelona and real estate expert. “Parents advised their children to get into a mortgage because it worked for them. In addition, they provided facilities: tax relief, it was easy to get and they assured you that the price of housing would never go down. Socially, it was assumed that if you rented, it was because you were not doing well. ” “Family pressure is the worst,” acknowledges Dolores. “Since you were a little kid, you have to have a house paid for the future, but it’s a big mistake.”

According to experts, the current situation can be traced back to the incredible rise in prices suffered by housing in Spain. “It was not the result of the law of supply and demand, but of the debt capacity of the population set by the banks,” says Colau. “During the bubble,” he continues, “Spain was the country with the highest per capita housing ratio in the EU and, with more than 20% of the empty flats, the increase in prices was not explained by their scarcity. The easy credit was crucial to raise prices, which multiplied the effort that had to make a family to access a home. If in 1997, 3.8 gross annual salaries were necessary to buy a flat, in 2007 they amounted to 7.6. As analyzed by financial experts, the biggest driver of wealth and growth in that period was credit: the indebtedness of families went from 55% to 130%. “No houses were sold, but mortgage payments, which was what interested banks,” Bernardos concludes.

“The financial entities themselves were the ones that were inflating the prices by giving mortgages to 10, 20, 30 and even 50 years!”, Points out the lawyer specializing in foreclosures Rafael Mayoral. When the credit crisis broke out in the US, banks stopped this practice, investors stopped buying debt and the crisis broke out. By not lending money, consumption fell sharply and unemployment increased to 24%. Bernardos does not say guilty, and dismisses the “bad will” of banks in this process, but alludes to the “poor wisdom” of both these and the government and believes that the real estate market could have been regulated to avoid the current situation. “If you see that 40% of sales are for speculation, it is clear that something is going wrong.” Mayoral differs: “The main responsibility for the situation we live in are national and international financial entities, and the incredible thing is that they have impunity.”

Jaime’s son was encouraged to buy a flat because he was assured that “his value could only go up”. Newly married, the telecommunications company he had created was going from strength to strength, and he asked his father to guarantee his home. After separating, he had to close the company and he found a foreclosure on, despite having paid the fee for 10 years. “When they take the floor to auction and the bank is left, it will cover the debt that remains to be paid,” explains Jaime, “but they do not settle, they ask me for 82,000 euros as a guarantor. I have to deliver my house, which has been paid for 31 years. “

Jaime signed the bank guarantee at nine o’clock at night in a notary

Jaime signed the bank guarantee at nine o

 

that was full of people, “they had us until midnight,” he recalls. “In theory, the guarantee would only cover the interests of the mortgage, but it turns out that they used it for everything.” Mayoral, the defense lawyer in many foreclosures in Madrid, denounces abuses, scams, and deceptions in these firms. “The entities knew that many of these mortgages were never going to be paid.”

The evictees can not join the long waiting lists to get a social rent until they are physically removed from their home. And that, if they meet certain requirements such as collecting a maximum of 700 and a minimum of 400 euros. Rocío, on the verge of an imminent eviction, was waiting to be granted one of those rents but was told that there were no available homes. “They do not take care of me, they send me from one apartment to another without giving me solutions,” complained this administrative officer who lives in Madrid with two daughters and could not afford to pay for their home. He was unemployed in 2008 and soon after he divorced. His despair was such that two weeks ago he started a hunger strike. The bank agreed to stay at home paying a monthly rent of 250 euros instead of the 1,200 that had to pay mortgage installment.

When a dwelling goes into auction, the financial institution that appraised it can keep it for 60% of the value that awarded it, and if a third party intervenes – the real estate of the entity itself, for example – this percentage drops to 50%. This is how the banking entities that gave credits to finance the homes of Rocío and Palomo have proceeded. In 2007, when the family bazaar worked well, Palomo and his wife decided to change their 60-square-meter flat, which was already paid for, to a larger one. The bank gave them an advance of 20,000 euros of the 394,000 that the new house cost, while they put their house on sale. “They valued it for this price, although the real value was less,” he clarifies. As things got ugly with the crisis, we were never able to sell our apartment. ” With the drop in the value of the home and the bank’s award for half the price, in addition to staying on the street, Palomo is still pending a debt of 180,000 euros that can not cope.

“Many of the things that are happening today are the result of disinformation

"Many of the things that are happening today are the result of disinformation

 

says Colau. “When the banks granted mortgages, they assured that in the case of not being able to face them, giving the floor the matter was solved. And it’s not like that, very few banks accept the floor to forgive the debt. ” In Spain, the mortgage is a private contract, unrelated to housing. Therefore, once the property is delivered, the debt is still pending. “400,000 executions have been carried out since 2007, which means that all those families have been condemned to be marginal,” complains Colau. “With a debt on top,” he continues, “it’s very difficult to start over. Even if you work 24 hours a day, everything you enter will be seized to cover the outstanding debt with the bank. The only way to subsist is to work in a submerged way “. Palomo is outraged: “It’s a total exclusion. With the dation in payment at least you can start clean, but otherwise, it is impossible. “

The PAH calculates that the difference between the debt of 32,500 million euros of the existing mortgage loans and the 24,375 million that today are worth the foreclosed assets is 8,125 million, in the concept of the devaluation of assets. If the dation in payment were accepted in exchange for the mortgages that are in process of execution, this would be the figure that banks and savings banks would have to face. “It is not negligible, but it represents only 52% of the benefits obtained in 2009 or a percentage somewhat lower than in 2010, is a matter of will,” says Colau.

Achieving that this measure was normalized was one of the objectives for which the PAH was born in 2009. The others: paralyze evictions, get a social rent that does not exceed 30% of the income of a family and collect the 500,000 signatures needed – that already have – to present in the Congress of Deputies a modification of the Mortgage law that guarantees the right to a house, which they will present at the end of the month.

Matías arrived at the desolate PAH. “I thought that what happened to me was because of me. The first day I did not want to talk, but I took courage, I presented my case and handed over the documentation, “he says. The person who is in the process of eviction does not usually feel anger or anger, but disorientation and sadness. “They are neglected by the Administration and threatened by the banks; many hide depressive pictures “, reveals Colau.

Occasionally, tension creates in the family an upset

that even leads to episodes of gender violence, separations, alcoholism or various pathologies. When Loli discovered the debts that her husband had acquired, she also began to suffer ill-treatment from him. “We had always lived very well because he worked as a stevedore in the port and had a salary of 6,000 euros per month. I depended on my husband because he said that, with his salary, he did not have to work. I started seeing strange things, but when I asked him, he always lied to me, “he says. “By putting the complaint about mistreatment and start the divorce process everything was uncovered.” Today Loli has to face half of a mortgage of 400,000 euros: “One day he took me to the bank and told me: ‘Sign here.’ And I, like a fool, did it without asking what consequences it could have. We moved from home to a larger one, even though we did not need it because the other one was already paid for. Now they are going to throw me into the street and I have nowhere to go, “he explains.

Matías’ apartment had been paid for three decades when he used it to guarantee a loan to reform, by imposing the Town Hall, his bar in the town of Santa Coloma de Gramenet, in Barcelona- Citrus North why not. However, with the crisis, consumption fell, credit interests increased, one of his partners died and the other suffered a stroke. Matías was forced to close the business and did not have access to unemployment because he was self-employed. After this episode, his wife left him with three children under his care. He stopped paying the loan installments in March 2009. One year later, a letter notified him that his apartment was in the process of being auctioned. “I was stunned,” he admits. The PAH managed to paralyze the first eviction the day before, and the same happened with the second attempt. “I took everything out of my house because, once you are evicted, you can not go back in.”

Since then he lives with borrowed furniture waiting for the next warning and does not give up in his effort to find a solution. “When I proposed to the bank the dation in payment, they accused me of being a blackmailer! What has the value of my apartment gone down? It’s not my fault. No one has lowered my debt. They valued it to give me credit, “he says. “If he were alone, he would have shot me! -keep going-; I do it for my children, especially for the older one. ” He put the name of his daughter, 24 years old, “on a piece of paper, to fill out the credit form; and now she’s after me in all this. ” He tried to get the girl out of the paperwork, but the bank stopped her. He is still in charge of Toni, 17, a student of electricity. Both subsist with the help of 426 euros granted to be over 52 years. Toni has lived this process day by day, and her way of coping has been through studying. “Sometimes I ask my father, but I almost prefer not to find out,” he admits. The oldest son of Dolores, 13, blames his parents for what is happening to them; the little one, of 10, still does not understand it.

Since the mortgage is not paid until its execution becomes effective, it can go from one to three years. During this period, the bank tries to convince its clients to refinance the debt or to ask for new credits that cover it. This is how Dolores and her husband proceeded, without improving the situation. “It’s bread for today and hunger for tomorrow,” says Colau. It usually ends the same, but with more debt. “

All families interviewed for this report want to finish the process they are living as soon as possible. “It’s a nightmare”, acknowledges Dolores, who will know if they accept the donation of their house in the coming days. However, stories like Antonio’s radiate hope. The worker of the construction sector, he was unemployed two years ago, which prevented him from facing the payment of 900 euros a month that he paid for the apartment he bought in Granada. “When I proposed the dation in payment, the bank refused, but after several peaceful group actions, through the PAH of Granada, the bank accepted the measure,” says the 32-year-old who has returned to live in the home of His parents.

Gonzalo Bernardos is confident that financial institutions

Gonzalo Bernardos is confident that financial institutions

 

along with the political class, will find ways to get out of this situation. The Minister of Economy, Luis de Guindos, opened the doors to the dation in payment in February – was finalized in a decree in March – although it was through a code of good practices for financial institutions, to which they adhere voluntarily, and with a series of criteria (that the whole family is unemployed, that the mortgage quota exceeds 60% of the family’s net income, that the mortgage does not have guarantors …). In July, the Catalan parliament also approved a bill, agreed by all groups, to protect families from foreclosure proceedings.

Before closing this report, Jaime’s son was accepted as an apartment in payment of his debt, which frees his parents to respond with his apartment. The only requirement that they have been imposed, by contract, is not to appear in the media to explain their case. For this reason, Jaime is a false name and does not appear in an image. “A small victory, they point from the PAH, but there is still a long way to go.”