By ALAN CLENDENNING, Associated Press
MADRID (AP) — Irene Gonzalez is desperately waiting to hear if she'll benefit from an emergency government decree that protects Spaniards such as her from being evicted for failing to make their mortgage payments.
Gonzalez, 45, has had her full-time job reduced to part time at the small air-conditioning company she works for. She's a single mother caring for two children in a cramped apartment in a working class neighborhood that she and her ex-husband bought in 2001, when the nation was basking in a strong economy and a seemingly endless housing boom.
She says she can't afford the mortgage payments and her ex-husband, who always handled them after they divorced, stopped paying several years ago when construction business soured with the bursting of Spain's building bubble.
Even if Gonzales is granted a two-year reprieve from eviction, Spanish law still mandates that she and her ex-husband will still owe almost €140,000 ($183,000) on the mortgage, court fees and interest for the rest of their lives. If they don't pay off the debt, their children — now 13 and 8 — inherit it.
Spain has endured a wave of foreclosures that have generated protests and at least two recent suicides by people about to be ousted from their apartments and houses.
"What I want to do is just give the house to the bank and be free of the debt," the 45-year-old Gonzalez said. "I've told my parents I want to renounce my inheritance because the bank would get my part."
Since issuing the emergency decree, which will protect Spanish families with an annual income of less than €14,400 after taxes, the government has been under increasing pressure to come up with reforms to its mortgage system. Activists have been lobbying for an insolvency law that would allow those who have defaulted on their mortgages to simply turn in the keys to their homes as they do in countries like the United States, freeing them from mortgage debt.
In neighboring France, for example, if someone cannot pay their mortgage, there is an official body that acts as an arbiter between bank and homeowner to work out the loan. If that process fails, the bank will take the homeowner to court and get permission to auction off the house. Expelling the former owners takes a second trial.
For the first time this month, Spanish voters cited foreclosure evictions as one of their main concerns, according to a recent poll by a government institute. Meanwhile, some Spanish judges outraged with being forced to turn people out on the streets are increasingly refusing to order evictions. And several mayors are threatening to withdraw municipal funds from banks that evict residents, while other city councils are designating their communities "eviction-free zones."
Every Tuesday night, a conference room in Madrid is packed full of people seeking advice from the Platform for Mortgage Victims, an anti-eviction pressure group that has started chapters across the country. The worried homeowners, who owe amounts ranging from tens to hundreds of thousands of euros on their mortgages, are desperate for help and advice after receiving court notices that their homes have been auctioned for a fraction of the purchase price and they'll soon be kicked out on to the streets.
Teary-eyed, they clutch court paperwork and describe how banks freely granted loans for 100 percent of the cost of the home they bought during Spain's economic boom that started crashing in 2008, and has only deepened since. Some are grandmothers who had paid off their houses decades ago, and then tried to help their children by putting up their property as collateral for a loan — and now face eviction because of non-payment by the children. Many are immigrants who arrived in Spain seeking a better life only to see the economy turn sour.
Before the financial crisis hit Spain in 2008, the country was on an extended building boom lasting nearly a decade. Banks lent money freely, frequently offering mortgage applicants more than they said they wanted and often encouraging borrowers to take on more mortgage debt for restoration projects and new cars. But home prices have crashed more than 30 percent over the last four years and the lending market is virtually frozen.