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November 16, 2012 6:50 pm
Diana and José Escubero are not sure where they and their two young children will be living in a few months time.
Since Mr Escubero lost his job in a factory producing animal feed, they have been struggling to meet their mortgage repayments of €1,000 a month. They are coming to the end of their life savings.
If they don’t find a way to pay, their bank will seize their Madrid apartment, and the couple will join the 350,000 Spaniards evicted from their properties over the past four years.
For the past three weeks, Ms Escubero’s father and her husband have been camping outside the headquarters of Bankia, their lender – now nationalised – demanding that the bank cancels the debt. To stave off eviction, the couple moved back in with Ms Escubero’s parents to save money.
“We will do whatever it takes not to lose the flat,” she said, “even it means going on hunger strike.”
In the past month two homeowners have killed themselves rather than face the catastrophe of eviction. Amaya Egaña, a 53-year-old former councillor in the Basque Country, threw herself from a balcony as officials arrived to seize her apartment.
With the country scandalised, Spain’s banks agreed this week to delay repossessions for those deemed socially vulnerable, with the government of Mariano Rajoy proposing a law to suspend for two years evictions of people with young children, the disabled, and the long-term unemployed.
The Escuberos’ situation is being played out across Spain, as families are forced to support jobless relatives with housing, food or by making payments to stave off defaulting on their mortgages.
“If it were not for the support of families, the situation would be much worse,” said Juan Ignacio Sanz, a professor at the Esade business school. “In many cases grandparents are now the ones who are paying their children’s mortgages with their state pensions. I don’t know how long that can be sustained.”
Candela Logrosan, 56, receives food parcels from the church because she is on a low wage, but because her Madrid apartment is subsidised by the state, she gives away the food to her neighbours. They call it “Candela’s café”.
“The little I have, I give,” said Ms Logrosan, who earns €400 a month cleaning offices but enjoys a very low rent of €138 a month.
Silvia Rodríguez, a Madrid-based sociologist, argues that Spain’s tightly knit family culture, and the social support networks it provides, is linked to a collective memory of harder times during the civil war of the 1930s – and to the traditions of the Roman Catholic church.
“In Spain there are certain moral values that have always been of the utmost importance, particularly when it comes to family, family support, and your friends and neighbours,” she said.
As a result, a comparatively low level of people are defaulting on their mortgages.
Although Spain suffers almost 26 per cent unemployment, and residential property prices have tumbled by more than a quarter in many areas, the level of mortgages in default stands at only 3.1 per cent of the total, according to the Bank of Spain.
There is another reason, bankers say: the country’s draconian mortgage law, which forces families to go to extreme lengths to avoid a relative succumbing to a default.
Under the 109-year-old law, returning the keys of your property to the bank does not rid you of your debt. A bank can seize a home for 60 per cent of its appraised value and then pursue the owner for the outstanding sum, including interest and legal fees – leaving those unable to pay both homeless and in debt for life.
In many cases, during the decade-long property bubble, Spaniards and immigrants were lent amounts they would never plausibly be able to repay, often by crippled banks that have since fallen into the hands of the state. These people now face financial ruin.
Maria Moran Sanchez, 45, bought her apartment in 2006 with her sister, borrowing €290,000 on a monthly income of €1,200 as a telecoms worker. Her sister earned €700 a month as a helper to the elderly.
When Ms Sanchez lost her job two years ago, they were unable to keep up their repayments and were evicted – but left with a debt of more than €180,000. Now living in a friend’s house, Ms Sanchez says this, too, is now at risk of repossession.
“It makes me especially sad seeing people who have committed suicide because of evictions,” she said. “But I am a realist, I have to continue looking forward. I can’t look back into the past. I will continue to fight so that they cancel my debt.”
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