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It seems to me that the Spanish banks are going to be in real trouble if they don't stop being so intransigent. A perfect case in point:
Someone I know cannot pay their mortgage at the moment. The husband has gone to northern Europe to look for work, and the wife is working as a waitress. They are in their 30's, I imagine.
They have spoken to the bank manager to ask for a breathing space, or terms or the like. The bank (Guipuzcoana) refused to discuss the matter and basically said that if they can't pay their mortgage, they will reposess.
If this is happening all over Spain (the Spanish are in deep as well), then the banking system will own a lot of properties that they don't want, can't sell, and can't maintain.
Usually, when a bank reposesses, it sends the property to an auction house and puts a reserve on the property equal to the remaining dept, thus getting its money back. What if thousands upon thousands of properties do not achieve their reserve prices? What will the banks do then? Throw a "Northern Rocky"?
These banks MUST be more flexible and pragmatic, or the whole system will collapse. Surely, they can re-negotiate a mortgage so that for, say, 3 years the property owner pays 1/3 of the repayments, and makes good over the remaining period.
What will happen when there has been poor holiday rental returns next year as well as this one.
This all needs to be faced NOW, and not when the banks have become the only property owners in Spain!
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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As someone having problems at the moment, I have to agree with everything you say.
I am amazed at how inflexible our bank has been. I keep hearing that banks don't want to incurr repossession costs, but they just won't work with anyone who is struggling!
People keep telling me to talk to the bank, but they won't discuss anything!
Hopefully, thanks to a generous friend, we have escaped repossession, but I really feel for any one in difficulty. Three months isn't long when you are trying to make decisions and turn finances around, but that's as long as you are allowed and then the proceedings start! It is very scary and very stressful!
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Excuse a very tired metaphor, but they are shooting themselves in the foot!
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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Why that couple bought in Granada have to sell just because airline cut the flighs to there? I am sure they can drive to there. If they do not drive, they can take ferry from UK and coach on Spain side.
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Flying Cat - they live in Murcia province and the issue is not flights, the issue is thousands of people not being able to pay their mortgages, nor sell thier property, nor rent it, nor find jobs. These people (like me) live here permanently in Spain. We don't give a damn about flights per se as we don't go back to that benighted country (UK I'm talking about) except for funerals etc.
If you read the article again, it points out that if and when flights are cancelled, then property prices in the area will drop even further.
Would you buy your property again in Mojacar if there were no flights to Almería? Or would you look at the map and say "let's buy in an area where there are flights to a nearby airport".
Foreign owned second home (and therefore all) property prices are related to proximity to an airport.
What I'm trying to say is that the banks are fuelling the crisis by not being flexible with their borrowers, and are going to end up with the problem of unwanted property x 10,000 in their laps. The last thing a bank wants is to be the owner of hundreds of houses that it can't sell. They need to start thinking about this NOW!
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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Max I think part of the problem of inflexability may have somthing to do with the way mortgages in Spain are regulated. It seems to me that any change to the terms of repayment or time period effectivly mean a new mortgage is set up with all the attendant set up costs and Notary fees. Thats why it is so difficult to change mortgage providor if you see a better or cheaper mortgage it costs an arm and two legs. This message was last edited by JohnKath on 9/12/2008.
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Good point, well made, JohnKath.
So....what's the alternative? Banks giving loans to pay their mortgages?
I a ship is sinking, you need to plug the hole, and worry about maritime regulations regarding with what you plug it later.
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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Introduce some flexability into the mortgage regulations more like UK but that probably means a change in the Law.
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Lindie what caused your finacial problems? Job lose or increased mortgage payments. I personally find it shocking that most mortgages are floating rates, I don't know how anyone could survive having there mortgage payments double.
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Decided after all I don't like Spanish TV, that is having compared both.
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virtually since day dot of the euro the issue of a fixed rate was irrelevent as the euro was always lower than from example sterling ( interest rate) and becuase it was centrally controlled rarely if ever went up. the last 18 mths has blown that away but many a client will have been living in spain or have a mortgage for more than last 18mths.
any securing mortgage finance this year will almost certainly have taken a fixed rate in currrent climate
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Hi Rob in Madrid and others.
I'm not talking about me, I wouldn't bore you with my personal circumstances. I'm talking about the big picture.
Hasn't anybody seen the tsunami that's coming?
This is not a "dip" in the market,
Put on your seat belts, we're in for a bumpy ride! (Apologies to Bette Davis).
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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My sediments exactly I personally feel that Spain is in for a major foreclosure crisis much like is going on in America. The problem is that banks are cutting back on lending making home sales difficult if not impossible which feeds into the price crash, people than can't sell and end up walking away. Further more Spanish banks are totally unprepared to take back thousands of homes.
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Decided after all I don't like Spanish TV, that is having compared both.
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Hi Rob in Madrid
You understand it, I understand it - why don't the fat cats in the banks understand it?
The worst is yet to come.
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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Because if they can pull the wool over the shareholders eyes for long enough they make off with mind blowing bonus's which when it all turns sour they add to with legally obligated severance pay and also ask for outstanding bonus's based on last years performance. This message was last edited by JohnKath on 9/14/2008.
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Something i read about the american credit crunch and reposessions is that if you simply hand back the keys thats the end of it, yes your credit rating takes a bit hit for a few years but tyou are not pursued for the outstanding amount, hence the article i read (sorry can't find the link just now) said that even many middle class who can afford to pay their mortgages but find themselves in serious negative equity are walking away and then just renting for less than they were paying....seems a little short sighted to me as negative equity is always only an issue if you want to sell or need to remortgage.....
But not sure how it works in Spain, I know in Scotland they will pursue you for any outstanding debt..
funluvin
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Never let anyone tell you what you can't do!!
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That's all well and good, but what about people who have already paid off, say, 80,000€? Hard to walk away from that.
In Spain, the mortgage is actually written into the escritura and recorded in the land registry. The bank has to apply to the courts to have you kicked out, if you refuse to go. How this would come down if someone had an ill, invalided pensioner, babies etc. living with them I don't know. Maybe, if you explained to the judge that you intend to pay but can't at the moment, it will be taken into account.
Anyone had personal experience of this?
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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Your correct about America, land of the brave and indebted  I've read many stories of people walking away from houses but staying current on their CC. Also unlike the rest of the world the banks love (or used to) recent bankrupts, they are the best and most profitable customers, that is, of course, next to the working poor. Doesn't make any sense to me, but then I only lived next door.
From everything I've been reading the Spanish are as indebted as the British and Americans are.
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Decided after all I don't like Spanish TV, that is having compared both.
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Rob,
What's the story in Madrid? - I bet there are more than a few with the squits!
At least where I live, most of the Spanish own their own property and they can return to subsistence farming on their land like these two gentlemen:
Actually, these bullocks really are used for farming, it's just that the passengers are a couple of Brits (both ex-marines actually).
Sorry, I'm getting off the point. In inland Spain, they can pull down the shutters and do this.....
but what about the city dwellers in Madrid?
For example, in Murcia, where they are all Del-boys and everyone has a BMW on the never never (or is it the ever ever?) they are really in trouble.
Solutions?:......
First answer: we should never have bought anything from China.
Second answer: we must stop now. This message was last edited by Max Kite on 9/15/2008.
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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I told you it was serious!.......
ITN - Tuesday, September 16 09:17 am
Financial markets are in turmoil once again as shockwaves from the Lehman Brothers collapse continue to be felt around the world.
London's FTSE 100 Index fell almost 100 points on opening after losing 212.50 on Monday - a slump that forced the Bank of England to pump an extra £5 billion into panicked money markets.
The 158-year-old US investment bank, which lost billions in the credit crunch, filed for bankruptcy after weekend rescue efforts foundered.
Which is going to be the first Spanish bank to fold?
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Max Kite
Maximeters S.L.U.
www.maximeters.com
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