New guidelines to protect home-owners

Eviction protests are frequent

On Friday the Spanish government approved a new voluntary “code of conduct” for banks with the aim of helping poorer home-owners to settle debts and stay in their homes.

The economic crisis has caused a huge increase in the number of evictions which has reached “crisis point”.

The new guidelines will mean defaulting owners can now hand back the property to the lender as a way of cancelling the debt. Mortgage conditions can also be modified for a period of up to 40 years.

Under current rules a bank can repossess a home if the mortgage payments are not up to date and they often demand further payments from the owner if the value of the property has fallen below the amount borrowed. Other “administration” fees are also often added to the debt.

The new guidelines will not protect every home-owner, deputy prime minister Soraya Saenz de Santamaria explained. The rules will apply where all members of a household are unemployed or when the mortgage repayments are equal to, or more than, 60% of the total household income.

“We have adopted these measures in parliament to ease the dramatic situation of many Spaniards, who have lost everything, who have lost their job,” she said in a press conference following the approval of the guidelines.

“Many families, more than one and a half million, have all of their members out of work. These are families that have no revenue and, given their inability to pay their mortgage, are facing eviction.”

Since the property bubble collapsed in 2008 there have been over 300,000 registered evictions, Sra. de Santamaria said.

With the unemployment rate at 23%, one of the highest in Europe, and the governments austerity measures, introduced over last month, many people are continuing to struggle and many are facing the prospect of eviction. However, with so many people in the same boat Spanish solidarity is spreading across the country.

Many times over the last months crowds have gathered where properties are due to be seized, to prevent court clerks and bank officials from gaining access to the property and evicting residents.

The Platform for Mortgage Victims, an association set up to help defaulting owners by staging the protests, says it has prevented or postponed 156 evictions in Spain since it was set up in 2009.

Economy Minister Luis de Guindos announced his plans for new guidelines last month in parliament.

“This situation is a human tragedy. The government is very sensitive to the situation created by the large number of evictions which are affecting a large number of citizens,” he said.

Eviction “code of practice” needed

Economy Minister, Luis de Guindos

Economy Minister, Luis de Guindos has called for a “code of practice” to be drawn up for banks to help struggling home owners to stay in their home and reduce their debt.

Speaking in parliament today, Sr. de Guindos called for an end to the “human tragedy” caused when a family is evicted, effectively making them homeless.

“This situation is a human tragedy,” de Guindos said. “The government is very sensitive to the situation created by the large number of evictions which are affecting a large number of citizens.”

“What the government is going to try to do is protect a segment of the population, which because of the economic crisis and as a consequence of the errors of the past, may find itself in a very difficult situation,” de Guindos added.

The minister called for steps to be taken to allow defaulting home owners to write off their mortgage by handing the property back to the bank, sparing them from accumulating further debt.

The code will not be there as a get-out-of-jail-free card for everyone with debt problems. It will be there to provide help for families that fall under a definition of economic exclusion, which has yet to be defined. Those that will benefit are likely to be families in the lowest income bracket, or with no income, and with no additional assets.

Official figures show that nearly 43,000 evictions were carried out in the first nine months of 2011, just under 5,000 fewer than the total for the previous year, which was 47,800.

Over recent months campaign group PAH has staged a series of protests on the doorsteps of home owners awaiting eviction. In a statement the group said a code of conduct was not enough to protect families or provide assistance for those already evicted.

“We do not need recommendations but legislation that guarantees that citizen’s fundamental rights will be protected,” the statement said. It also went on to say that appealing to the good will of the banks with a “voluntary” code would not work because these are companies whose only reason to exist is to get maximum profit from it’s customers.

Luis de Guindos is a former Lehman Brothers executive, appointed by Mariano Rajoy, so I have to wonder how on earth he managed to get a job as a government minister in a country still suffering from the damage Lehman Brothers caused.

Express evictions law modified to help landlords

Malaga Courts

Non-payment of rent has become a real problem on the Costa del Sol. According to new figures from the National Institute of Statistics (INE), 878 tenants went to court for non-payment of rent in 2010. The courts have a backlog of cases causing delays fuelling the debate that the 2009 ‘Express Eviction’ law is not working.

A new law was introduced this month with the aim of speeding up the process which could benefit up to 900 landlords in the region. Experts predict, however, that the law is destined to fail due to a lack of manpower in the courts.

The new law, La Ley de Medidas de Agilización Procesal, aims to establish a set period for dealing with tenants who refuse to pay. After a tenant has been presented with a demand for payment they will have ten days to either settle the bill or vacate the property. If neither of these options are taken the tenant will have to provide reasons for non-payment or the courts will assign a date for eviction.

Under the previous laws the landlord would have to apply for a court date which could take months. The court would then decide when the tenant would be evicted and the property reclaimed.

The president of the College of Malaga Estate Agents, Cayetano Rengel, said “The new law is fabulous, as long as it works. Theoretically, in three months the non paying tenant will be on the street but the reality is that the courts are struggling.” He also said that increasing the speed of the eviction process would benefit the property industry as a whole adding “It’s a welcome change and should make an enormous difference, but not if it isn’t accompanied by an increase in court personnel.”

Meanwhile, Carlos Ruiz, manager of the Association to Promote Renting and access to Rented Property, said that the previous system didn’t work due to the lack of manpower in the courts and thinks this problem will continue and the new law wont be fully effective until human resources are increased.

Experts in Malaga estimate the current time from filing a lawsuit to eviction at around six months, much longer than the 60 days intended under the current law.