Spain suspends house evictions for two years

mac75, I agree with you. I would much rather my taxes be used to help these unfortunate people than some of the ways governments and the EU currently WASTE our money, too many examples to mention.

feck·less/ˈfeklis/

 

Adjective:

(of a person) Lacking in efficiency or vitality. Unthinking and irresponsible.

so taking on so much debt for a house without thinking about situations such as if you lose your job or
go through a difficult time would not be considered feckless?

taking on a large mortgage to buy a house yet cannot afford to even rent a house would not be considered feckless?

i would say many of these families have indeed been feckless, some even outright wreckless.

a businessweek article highlights some of the pure stupidity of some of these people.

wages €24,0000 and borrowing a 100% mortgage of >€200,000 >x8 earnings.

but who would not be tempted to buy a luxourious apartment in downtown Madrid?

thats not to say they do not deserve any sympathy for their current predicament or forced to live
under a bridge as Poppyseed says.  it is at times like these 
that many people fall back on friends and family and try to get back on their feet after making bad
decisions.  if this is not enough, they can even call on private charities (of which their are plenty) and
such kind hearted and morally superior people such as Poppyseed, mac75 and evento.

Poppyseed,mac75 and evento, please do tell us what you have given and what acts of kindness you 
have done to help these poor families?  

it is great that the Norweigians are helping some Spanish families, i mean, Norway is oil rich and has one
of the largest soverign wealth funds in the world, so they are in a position to help.  but european taxpayers
are broke, perhaps you haven't noticed the debt to gdp ratios of spain and the UK?

are you also suggesting that other people with mortgages should stop paying their mortgage and live
rent free for 2 years?

what about those that rent?  should they stop paying their rent as well?  (oh they already do!!  that is
why no foreigners rent to spanish because they won't pay the rent...)

 

 Firstly I'm sure we all know what feckless means, no need for the dictionary definition, I was just surprised that you used that word. So just how much should you have saved up for a rainy day just incase you run into "bad" times (more like catastrophic times)? 2 years of mortgage payments? 3 years? more? because it's not just mortage payments you'll have to cover if you lose your job, but everything else too. I would like to see how many people survive and maintain their "estate" after two years of zero income, even after one year the majority will have serious problems and many after 6 months. Whether people have borrowed 8x or 6x o 3 times their salary you'll never know, but the banks weren't totally stupid they covered their back as well. However I find it very hard to believe that someone on 24,000 a year managed to get a 200,000€ loan, even at the best of times. If they did, it wouldn't have been guaranteed by their income alone but in conjunction with a third party giving a bank guarantee, maybe a family member or another property or other assets. Yes that could be "feckless" but condoned by whoever guaranteed the loan, and I agree little sympathy in those cases. Anyway I am convinced that that size of mortgage on only 24,000 income alone is impossible. When I bought in 2008 , still good times for interest rates and easy mortgages, it was impossible to get more than 4X your salary without an additional guarantee to support the payments. So the businessweek article isn't telling all the story.

As far as falling back on friends and family, that is all well and good if friends and family are in a postion to help. over 35% of pensioners are supporting members of their family, children or grandchildren, with nearly 6,000,000 unemployed and 1,500,000 households where every member is unemployed, I think it ifairly easy to understand that there may be quite a few cases where there aren't any friends or family to fall back on.

As far a chariities are concerned, they are asking actively for more funds as they cannot cope. Food donation has increased drastically and hundreds of thousands of families don't have enough even to buy food for the month, let alone medicines and other basic necessities.

If you ask me what I have done, well I'll tell you, I have helped as much as I can family members who can't make ends meet, by contributing to my nephews' school books, buying them shoes for the winter  term, a trolley of food from time to time, a gas bill or some money for petrol, handing out unused furniture so they don't need to buy, looking after relatives so they can work unusual hours. I'm sure everone does what they can and what is within their means.

As far as the Norwegians are concerned, it is no the Government, but the the people who moved to help the Spanish. So oils is not an issue. There are a lot of oil rich countries but I don't see anyone else doing anything. Don't take the credit away from them and justify in that way.

Who is suggesting that people should stop paying their mortgage? Of course not. If you have income you should pay, full stop, reach an agreement with the bank on the payments due according to present income and move forward. If the bank won't accept that then they should accept that you return the property, hand over the asset. If you don't have any income you obviously can't pay even if you wanted to. I am only speaking out for those who have no real means of paying.

Spanish do pay rent as they do pay mortgages. But as in all countries there are crooks and thieves, who will want to take advantage of the system or live rent free in rented accommodation until they are chucked out, but tht is bad luck and has always exited and always will exist, It is not a "Spanish" thing. You quite clearly don't live in Spain, it is very easy to talk that way when the situation doesn't affect you or your family directly.

There is a Spanish phrase that says :" Lo que los ojos no ven, el corazon no siente" (What your eyes don't see, your heart will not feel)

You clearly are short of sight when it comes to this issue. I would be interested to know what you would do if you had lost your job, run your savings to the ground looking for work and paying your mortgage for over 18 months, had no family or friends to go to for help and can't rent as you don't have a work contract or the money for the deposits and first months rent. That is the reality for the most of Spain. Would you still leave your house or wait until they throw you out (you'll keep the debt anyway) or until you find a job and try and save the situation?

 an interesting post mac75.

firstly, you are to be commended for reaching in to your own pocket and helping out people in need.  one thing that is not in doubt is that the kindness and generousity of the british and spanish people cannot be questioned to help those in need in times of crisis.  unlike others on this forum who suggest that these people should be helped by giving them other people's money instead of leading by example and digging deep themselves.

whilst you may not believe that the banks would lend 100% mortgage at 8x earnings does not detract from the fact that they did and that many of these are the people now in trouble with their mortgages.  if people would of taken out mortgages at a more reasonable multiple of their income and paid at least 10-20% deposit, then they would not have a large mortgage to pay and also would not have any trouble with negative equity.  therefore - it stands to reason that it can only really be these people who over exposed themselves to debt who are now in trouble.

same example as before but just 5x earnings
125,000 mortgage
12,500 deposit
112,500 loan
Variable rate @3.69%  €574.73 monthly payments  €6897 annually

with a mortgage such as the above - the mortgage payer has skin in the game and a 25% fall in house prices
will not very adversly affect their equity after 5 years.
and even if they get in trouble, if they even paid a reduced payment of €300 for a couple of years would not
be too devastating.

as you are in Spain (i am just a regular visitor), i am suprised you are not aware of the range of help available to people being evicted?  before the banks take the property, in many cases they offer the household social housing which they have often refused.  

also, the banks have tried to accomodate the household's situation by lowering payments yet these people still decided not to pay even that.

so lets get things straight, the banks are not making people homeless and they are not being unreasonable with regards to asking for payments towards the debt.

lets bear in mind that there has already been over 400,000 foreclosures in spain and many people have found rented accomodation and are not homeless.

it causes moral hazard (from bloomberg article):

“Of course these measures could produce a jump in defaults by families who think they are better off not paying mortgages and they know they can’t be evicted for two years,” said Fernando Rodriguez de Acuna Martinez, a partner at Acuna & Asociados, a real estate consulting firm in Madrid. “This is going to bring more problems than solutions.”

Stopped paying (from bloomberg):

“The bank told me the new figure of 300 euros wouldn’t even cover the interest payments let alone amortize the loan so I just stopped paying,” Cobenas said during an interview in Madrid where he and other protesters have gathered outside a branch of Bankia Group for the past three weeks to protest against foreclosures.

Cobenas bought his Madrid home with a 100 percent mortgage for 206,000 euros in 2005. “The bank offered me social housing at 280 euros a month but I want a better deal, something less than 200 euros,” said Cobenas, who came to Spain 21 years ago from his native Peru. He still lives at the foreclosed property rent free because his lender doesn’t want to evict him until alternative accommodation is arranged for him and his family.

 I guess we have the same situation in the UK where people "expect something for nothing" - the government should house them, feed them, pay for their childrens upkeep education, health etc...   im not sure this is behaviour we should be encouraging in society.

Thank you Mac 75. Someone who can clearly see the situation for what is, Very Complex. I too live in Spain, I too have a Mortgage, which is paid every month. It is difficult, as I was unemployed for 2 years, but we have managed as my husband is still working.

For the record, I tried talking to my Bank about reduced payments, or interest only for a fixed period, but nothing. They were not remotely interested. They said if we could not make the payments, they would add on the extra " intereses de demora" which are over 18 % and any other comisions arising from this.

Also for the record, they overcharged us on our Mortgage for 2 years, which they tried to deny, after a year, and finally having to go to "El Banco de España", they agreed  they had made a mistake and returned the capital over charged. When I asked where our interest was, they replied, What interest !!

Back to "El Banco de España " and still waiting, it´s now  over 2 years.

 evento

what is complex about the situation?

people took on too much debt when buying houses and are now crying wolf.

what is needed is a dose of reality for these people so that they live within their means, and this does not
include borrowing €200,000+ for a trendy apartment in downtown Madrid.

Mono Captian, your shallow comments, do not warrent a reply. As Mac 75 said and many others, the situation is very Complex, and if you cannot see that, I despair as well. Try answering the people !!

 evento, please just list maybe 5 points that are too complex so we can get an idea of what you mean?

im sorry my comments seem shallow to you, it is just that i do not believe that taxpayers should be supporting people to keep houses worth €200K while punishing the more sensible and prudent in society who live within their means.  

it could be a complex issue for you as you cannot see how immoral what you suggest is?

"as you are in Spain (i am just a regular visitor), i am suprised you are not aware of the range of help available to people being evicted?  before the banks take the property, in many cases they offer the household social housing which they have often refused."

Don't believe everything you read. This help and social housing is a load of rubbish in the real world, unless you do a hunger strike or attempt to commit suicide. The banks offer nothing of the kind.

"The bank told me the new figure of 300 euros wouldn’t even cover the interest payments let alone amortize the loan so I just stopped paying,” 

This is probably a case where th bank should accept the house in payment for the mortgage and let the guy move on with his life into rented accommodation and stop delaying the inevitable and stop increasing the debt unnecessarily. My sister in law was told by the bank manager that it wasn't even worth her while to pay any more payments if the "dacion en pago" wasn't accepted, as she would be left witht he debt forever so it was better for her to hold on to the little cash she had until the house was repossed. Luckily it came through and she is now free of debt and rebuilding her life with 4 children.

"According to Jesus Alfaro, a professor of Mercantile Law at the Autonomous University of Madrid, there is no short-term solution and any proposal should take into account that it’s “socially immoral and counterproductive” to reward those who took irrational financial decisions by allowing them to remain in a home they couldn’t afford to buy in the first place"

If they couldn't afford to buy it in the first place surely the banks wouldn't have lent them the money, if they didn't feel they would get it back? Let's not forget that the banks valued the properties through their target driven, commission based "independant" valuation agencies, chosen by the banks, not the buyer. They controlled the valuations and it was extremely common to get valuations for over 120% of the asking price and if they didn't they would just phone up the surveyor and have it redone, sure enough it would come back just as the bank manger would need it to close the deal and reach his targets! So if that isn't immoral and counterproductive, what is?

I know ignorance is no defence, but he banks are certainly more on the ball with finacial decisions than your average Joe Blogs in Spain, I can assure you. The responsability need to start with the banks, by restructuring the mortgage law and codes of practice.

The nation will follow suit as they will have no choice but to do so.

Christmas is coming, the geese are getting fat

Please put a penny in the old man's hat
If you haven't got a penny, a ha'penny will do
If you haven't got a ha'penny, then God bless you!

mac75, i agree with you, the banks are also responsible for this huge mess.  But lets not forget, that many of these people decided to buy properties far above the price they could reasonably afford and what was driving them was pure greed.

these properties need to be auctioned off to the highest bidder and get house prices lower again so that the market can return and people who have been saving and waiting on the sidelines for some normality to return to the market can step in and get things going again.

those that borrowed recklessly will have to start again, renting, whether in social housing or whatever.  what is so bad about this that you object to?

losing your home is not the end of the world, many people rent.

we had our house taken off us due to my husbands illness. we worked for ourselfs he had a bad stroke and could not work any more. we had no other income .

as there are not many jobs in spain at the moment and i have to look after my husband we suffered a great deal.

we tried to sell even at a loss but at that time there were not many buyers about. i wish we were there now and know what we know now maybe we might have scraped by. 

at that time social people said they could not help us as we have no dependent chrildren.

you say loosing your home is not the end of the world well i would not wish that on anybody loosing all we ever worked for it seemed end of our world.

 if we could turn backtime eh!!!!!

terrie52, i am sorry to hear about your bad situation.

it sounds as though you had over extended yourself in Spain.

with how low rents are currently, i am sure you can live your ideal lifestyle without home ownership.

gl with the future

"many of these people decided to buy properties far above the price they could reasonably afford and what was driving them was pure greed"

many, yes but the majority, no.  But those that were driven by greed were the ones that wanted to make a quick buck selling on properties and bought one after another until they got caught out. They admittedly deserve what they get, they know they are playing the investment game and accept the risks. 

"these properties need to be auctioned off to the highest bidder and get house prices lower again so that the market can return and people who have been saving and waiting on the sidelines for some normality to return to the market can step in and get things going again."

There you go, on this point I am in total agreement with you. But the first step is that banks have to accept the property and take it back to get the ball rolling, which they woukd rather not do. Don't you think many would have handed back their property straight away if it meant that they could free themselves of the debt, while they still had some cash available to start again from scratch?

those that borrowed recklessly will have to start again, renting, whether in social housing or whatever.  what is so bad about this that you object to?

I agree, they have no choice but to start again, if you can rent fine no problem, go and rent and if you don't then you are being "feckless". But take into consideration that social housing is virtually non existant in Spain, on a daily basis families that are being evicted are having their children taken from them and put into state protection as they do not have a roof to put over their heads. This is heartbreaking and totally unecessary when it probably costs more to maintain the kids under state protection than give the family "social housing" , which I insist is just a myth. Sure debts have to paid, people should go out and rent , start again, I agree losing your house is not the end of the world, dying is. But what about the people who are completely abandoned, familes detroyed and the kids being cared for by the state, what should they do? This is where Spain falls behind and the mortgage law need to defend these situations, especially with minors. This is exactly what the Government has done, forced a truce to protect families. What is going on here is not your average situation, it is no different than a natural disaster where mortage payments would be frozen. With 6,000,000 unemployed i would say that is pretty much a natural disaster. This doesn't mean that no one should pay their mortgage, but there should be a truce for those in real hardship, and as I mentioned in another post I believe the threshhold that has been established by the government is far too high and unecessarily generous even though the PSOE wanted it to be higher!

19,000 euros a year in the current economic situation is far too much to justify "hardship". So I think they are making a mistake here but the intention behind the action is correct.

Moncapitan,

I have just read the whole of this thread. How nice it would be to hear in the future that your holier than thou attitude jumps up to bite you on the bum, that you have hit hard times, and nobody has sympathy with your situation. Just saying ....

Here’s some complexities to consider Moncapitan, and the link between the rise of fraud and deregulation. It’s an article by Randall Wray titled “ Corporatism and Fraud are why we’re screwed”

http://www.economonitor.com/lrwray/2012/07/23/why-were-screwed/

Some interesting responses followed:

I think the article highlights some key problems. We can all sense there's an issue with the way western capitalism is evolves where increasing power is being placed in the hands of a few large corporates and governments who work hand in hand to protect their own interests. Resolving human traits such as greed and lust for power is tricky because if one becomes soft hearted in business you might fail and lose money. By contrast if you re-distribute large amounts of money to large amounts of people everyone only becomes marginally better off. Smart / privileged people are rewarded for taking calculated risks and investors invariable invest in people who are ruthless about making money since they'll do whatever it takes to win. As societies have become better educated and informed we are rightly questioning inherent human greed and selfishness that permeates large businesses and governments who'll do anything to protect their own lifestyles

For everyone out there who blames these "thieves" out there for all the worlds ails, GROW UP AND TAKE RESPONSIBILITY FOR YOUR OWN FINANCES AND POOR FINANCIAL DECISIONS!!! Good grief. The real root of the problem is the greed and selfishness WE ALL HAVE within us as HUMAN BEINGS.

My experience over the last 40 years in business is that lying and cheating have risen exponentially and when this behavior was once an individual failing, it has now become a virtue of successful institutions.

Before the messenger gets shot one more time, for those defending the ugly banks please answer these questions.
1. Was it greedy homeowners or greedy bankers who blew up Bear Stearns and Lehmann Brothers? Remember, the likes of Lehmann wanted cesspools of crappy debt that they knew was worthless and later admitted it was crap so they could bamboozle investors and rake in killer paychecks based on the whole scam. Who would not defend what they do if it pays 400k/yr or 800k/yr or 15,000k/yr or. .
And was not Lehmann's demise the moment of steep decline that we are still spinning away from?
2. Who created the excessively large pools of money used for the financialization of the mortgage industry-greedy homeowners with their paltry thousand or banks with their millions and billions?
3. Who argued for no guidelines, no laws, no regulations anything-goes, let greed rule, style of 'deregulation' of the banking and financial sector?

For all you youngsters out there, I've spent the last 45 years on Wall Street and I've seen it all, so pay attention: THIS IS AN EXCELLENT ARTICLE!

I'm glad to see academics getting angry about this. We needed committed people hammering at the doors of the academic economics and financial sector behemoths.

My argument is that we should be calling for far more effective monitoring and regulation of the financial industry to act as an essential automatic break to the self-destructive effects of greed from all quarters. We also need a reliable justice system that consistently enforces the rule of law in a timely manner and thereby protects citizens from all forms of financial malpractice and abuse.

And in the interim IMHO there should be radical measures to ensure that truly vulnerable people are protected from the aftermath of the crippling effects following deregulation of the financial industry.

 magsmate

i will consider that a complement that you consider standing by ones principles as being "holier than thou" - i think there is a distinct lack of people who stand by honest principles these days, particular among our so called "leaders" and the political elite.  but also interesting is the fact that you expect me to "learn my lesson" yet those who borrowed wrecklessly during the boom to buy property should not learn their's?  does that sum up your position?   the welfare state now extends to bailing out wreckless homeowners who earn less than €19K!

i am just arguing for fairness and for all people to be treated equally by the government, why is it fair that terrie52 should give up their home but others shouldn't?

all i am saying in a nutshell is that those who cannot pay for an asset should have the asset repossessed in the normal course of the law and no special privilidges should be given to deny the banks their property rights.  if you go down the path of denying property rights to the banks, the next step is to the individual (ask many eye on spain readers who bought houses that are deemed illegal).

the crisis we face today is simple and not complex because we face a moral crisis,   people have been brainwashed by the media and state funded schools to not know the difference between what is right and what is wrong.

As Calvin Coolidge once said in an address to the Red Cross in 1926:

"I can find no warrant for such an appropriation in the Constitution; and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. Prevalent tendency to disregard the limited mission of this power and duty should, I think be steadily resisted, to the end that the lesson should constantly enforced that, though the people support the Government, the Government should not support the people."

ads

i do not know what point you are trying to get across?

yes there is a huge problem now with the vested interests living high on the hog, with the government bailing out bankrupt institutions... the merger of state and corporate power that we currently live in is called Fascism... welcome to the new normal.

"Fascism should more properly be called corporatism, since it is the merger of state and corporate power"
Benito Mussolini

I believe you are wrong to call for more financial regulation, the horse has already bolted!  i don't believe the same idiots who got us into this mess should be the ones to get us out of it.

 mac75 , i agree with most of your post - i just think that those that need help to be rehoused, should get that help - through charity, friends and family etc, maybe the government can put some cash into helping them temporarily otherwise you are advocating the huge mess we have in the UK with welfare dependancy and families who spend a lifetime on housing benefit.

Moncapitan,

Financial regulation should certainly NOT be formulated by the same idiots that got us into this mess!

My point is that only by looking to a different perspective at the reasons why these crippling situations have occured in the firstplace, can we appreciate why banks loaned monies to such excess without any thought to the ramifications of their actions.

My point is that many invested in what they were led to believe was a safe product, protected by laws, protected by a government that would ensure the rule of law prevailed. People from all nations have been encouraged to buy property in total ignorance of the looming economic crises that were enfolding behind closed doors, enfolding due to deregulation of an industry that needs to be made accountable for their actions. An industry that now appears to have run roughshod without any thought to the consequence of their actions. The complex financial demise was already doomed to failure at the time when poeple were being encouraged to buy, and the Banks turned a blind eye to these uncomfortable and crippling realities.

 ads, i agree, those at the head of the Caja's and bank of spain, head of spanish regulator's should all be put on trial for their financial crimes the same as happened in Iceland.

but as you know very well, these champagne swilling beauracrats are better than us and should not be punished for their crimes.

Good Samaritans still exist!

www.eyeonspain.com/blogs/spainnews/8321/family-saved-from-repossession-by-anonymous-benefactor.aspx