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.