Mortgage Misery: Government and Socialists in last-minute talks to halt flood of evictions

Cabinet due to approve decree to ease suffering caused by banks’ foreclosures on Thursday

El País Madrid 15 NOV 2012 - 13:37 CET

The government and the main opposition Socialist Party were this morning maintaining last-ditch talks by phone in an effort to thrash out an agreement aimed at stemming a spate of evictions, which has sparked growing social alarm after the suicides of two people who faced losing their homes to the banks.

The Cabinet was expected later Thursday to announce measures to ease the situation.

Socialist sources did not rule out the possibility of an agreement after three days of intense talks. One of the sticking points is that the main opposition bloc also wants an overhaul of the Mortgage Law, which dates back to the start of the last century.

Another barrier to an agreement lies in the threshold of household income below which evictions would be halted. The government wants to set the limit at a monthly 1,600 euros, but the Socialists want a higher figure. The deputy secretary general of the Socialist Party, Elena Valenciano, told radio station Cadena Ser on Thursday that the difference between 19,000 and 22,000 euros is “fundamental for many families.”

Valenciano said there had been progress in the talks, albeit insufficient. “The details are fundamental,” she said, adding that what the Socialists want is for “no one to lose their home because of unforeseen circumstances caused by the economic crisis, and that people should be able to renegotiate their debt as banks, states and companies do.”

The measures are expected to include a moratorium of two years on evictions for families in vulnerable situations. Under the current Code of Good Practices adhered to by the banks, families with all members out of work can avoid losing their homes if the value of the property is below 200,000 euros. The intention is to progressively increase this threshold under certain situations such as that of large families.

The banks have agreed to a two-year moratorium on evictions for those in vulnerable situations without defining how this would work in practice. The Eurogroup has granted Spain a loan of up to 100 billion euros to recapitalize the country’s banks that have come unstuck because of their exposure to the now moribund real estate sector.

In a country with a lack of social housing for rent and which the home ownership rate is over 80 percent, the issue of families losing their homes is particularly dramatic.