In the first six months of 2011, 1,379 people or families were evicted in Hego Euskal Herria, which represents an average of eight evictions a day. How have we come to this harsh situation? In the Spanish state, the Land Law, liberated by the Aznar government, allowed the uncontrolled boom in housing construction. Urban policy based on the disqualification of land has made it possible to build anywhere for years, easily and quickly. And in their task, politicians have had the support of many sectors: builders have raised their homes very easily, banks have distributed credits too easily – often without taking into account the ability to repay loans – and notaries, appraisers, managers, property registrars… have participated in the game.

What about us? To what extent have we taken advantage of the context to live beyond our economic resources? There are exceptions of this kind, but Lucía Fernández has emphasised that, in general, we are the hardest hit by consumers. Adicae, a member of the Association of Users of Banks, Banks and Insurance, accuses consumers of a single error: the lack of a financial culture. “At least, let the crisis serve to make people realize that it is important not to sign contracts that have not been read well, to pay more attention to the situation of our financial accounts – how much they charge us for commissions and interests… –, to seek advisors on issues that we do not understand.” The lack of a financial culture – and the questionable behaviour of a private lender – was the origin of the famous issue of Bergara’s Kukullaga Goikoa farmhouse, and the lack of reading the small letter of the contracts has also prompted, among other things, the dismissal of vitorian Gloria Rodríguez – see table of the last sheet –.

Step-by-step process

In the third or fourth month of non-payment of the mortgage loan fee, the branch of our fund or bank would send the file to the plant and, in theory, if the risk department investigated our economic and employment situation, it would propose to negotiate. In practice, however, this is not the case in most cases, as Lucía Fernández explains: the case file is sent directly to the legal department and the legal proceedings are initiated. One day – from 6 to 9 months – the letter will come to us asking for payment: it will ask us for the sum of all the quotas we have not paid and the interest for late payment, or else it will add the whole loan. In both cases, it is very difficult to deal with the debt within approximately 20 days, as interest on arrears has greatly inflated the figure. These interest rates can reach 20-25%, which means an exponential increase in each unpaid share. To all this, we must add the process costs that are also assumed by the client, in the section of Mortgage Liability of the mortgage contract that we subscribe to.

At that point, foreclosure is ongoing, i.e. the bank has terminated the loan contract and has been done with the property. The law makes it possible to paralyse execution at any time, not in what the bank asks of us, if we take away what we owe ourselves (unpaid quotas and interest on arrears), but as we have said, it is not easy to raise so much money. Normally the process goes ahead, more and more crowded, and in the end the bank auction the house: they are valued and auction at that price, but if no one pays 100%, the price drops to 60% – the price with the valuation value that until recently could fall to 50%. The fact is that, according to Lucía Fernández, the valuation value taken as the starting point of the auction is lower than that acquired: “Because at the time of the housing boom, appraisers tended to increase their value. Therefore, if sold for 60%, there is still a lot of debt to those who have lost their home: part of the loan, interest on arrears, costs of the process... On the contrary, the bank has done nothing but win all the time: suppose we have paid the mortgage every month for five years, especially in interest, with that it has earned money; in exchange for what we lack for little money, it has been done with the house and with the sale it has won again. And it also wants us to collect the debts. It’s a round business for the bank.” Also for others, as you can read in the ad of the web Fotocasa: “Foreclosed housing: a unique opportunity to access housing much less than they value in the market.”

No housing or mortgages, but we will continue to be mortgaged until debts to the bank are cancelled. In case of default, the bank will resort to the embargo: we will be deducted directly from the salary, between 30% and 50% depending on the salary, we would expect to have the payroll in case of unemployment and we could also purchase movable goods (car, jewelry…).

Three main alternatives

One of the solutions for those with financial problems is to turn the mortgage loan contract into a rental contract: it would pay less than the mortgage and it lasts about five years. Subsequently, the contract would become a mortgage that would depreciate the rent paid, i.e. the mortgage would be discounted.

Another solution that is called for for for those who are worse is pay-as-you-go settlement: the house in debt payment. With the transfer of the house keys to the bank, the house would be appraised and that valuation would compensate 100% of the debt, assuming the bank all the remaining capital. In this way, at least, the eviction would no longer have to pay the money that would have been due to it. This formula is used in the French State and therefore in Iparralde, but not in Hegoalde, since the Spanish civil code provides for the possibility of paying it, but not in mortgage contracts or in subsequent negotiations.

The last option would be a mortgage moratorium, as an alternative not to leave people in the street. According to the decree elaborated by the Adicae association for approval by the Government of Spain, within three years it is proposed that people with problems do not pay the mortgage fee, but that depending on the economic capacity of each of them, they can choose not to pay anything, pay only interest or pay only capital. After these three years, which can be extended depending on the family situation, the customer would return to the previous contract. The interests that have not been paid in those three years would be put by the Spanish Government, as Fernández has pointed out that the Executive approved a budget of EUR 6,000 for the extension of mortgages that has hardly been used. In Ipar Euskal Herria, the formula is already the same: from the time of foreclosure, the judge can call the bank and the client and, depending on the financial capacity of the bank, can suspend execution until the situation improves.

Adicae has explained that banks, in most cases, refuse to negotiate, giving the client a despotic treatment and disdaining their phone calls or their face-to-face requests. The longer the agreement lasts, the more the customer is engaged, complicating the matter. Why not negotiate if the bank wants money, not the house? “Surely because they are orders that come from above. Banks and boxes are nervous about the context of the crisis, they are tightening the conditions for signing any contract with them and it can be good for them to squeeze the customer if they can recover the debt more quickly.” The opposite has been reported to us by Juan Cid, head of Labor Fund Communication: “In our case, we negotiate extensions or other mortgage alternatives taking into account each other’s difficulties, especially at this time. The main goal is that people don't have to leave their homes. However, we have hardly had a case of dismissal in our box, the only one in Gipuzkoa, and it has been because a man with a severe face has taken our hair.”

The law turns a blind eye

The law requires measures to prevent the eviction of a person, but in practice there is a contract with the bank over which the final decision is made by the financial institution. According to Lucia Fernandez, it is not a question of the law being in favour of banks, but of not defending the consumer. Not only that, the law does little to protect the consumer, but that has not been done either: “There has been an excess of freedom: neither the government, nor the public authorities, nor the Bank of Spain and France – the main observers of banks and banks – have been concerned with ensuring compliance with the law. Banks have taken advantage of our economic ignorance and those who had to control it have ignored it.” For example, in Hego Euskal Herria, up to 80% of the valuation can be borrowed, but banks have borrowed up to 100% and up to 120%, respectively. Also with risk control: the bank must carry out risk assessments before granting the credit, and when the level of return risk exceeds 40%, no mortgage should be offered, but it has been done. “Very high value loans have been granted, difficult to pay in 30 years.”

Some have also called for a law governing the over-indebtedness of families and small businesses, such as the Judges for Democracy. Adicae has carried out studies on over-indebtedness, based on the minority that needs a family to survive, and at the time transferred to the Government of Spain a bill which, although well received, was not subsequently served by the Government. In short, Lucía Fernández is disappointed with the attitude of the politicians: Lehendakari, Patxi López, and the President of the High Court of Justice, Juan Luis Ibarra, recently announced that they will mediate between the family and the bank, and has promised measures to avoid eviction during the electoral campaign of the past elections, but they are empty words for Fernández, only statements to win votes. “We have put many alternatives on the table, but no one has yet applied them. We have been in crisis for three years, every day they stay on the streets, and now, in the election campaign, have you realised that something needs to be done? As long as there is no real will, the situation will not change and the future we anticipate is terrible.” The Spanish Government has taken measures in rented housing, but not urgently in favour of the tenant: from 1 November the so-called “express eviction” has been implemented to facilitate the eviction of the unpaid. In the French State, a 1954 law prohibits tenants from leaving the apartment during the winter (from 31 November to 15 March) despite not paying it.

Couples from 30 to 50 years old, with a stable employment situation until the arrival of the crisis and often with their children; self-employed with difficulties to pay loans when the business begins to go wrong; small and medium-sized enterprises that have lost everything; parents who have hidden their situation from their children until they have been auctioned home; immigrants who do not control too much the language and who do not know very well what is going on... And the worst of all is eviction: who can seek refuge in the protection of the family, but the hardest thing is usually the immigrant population, who has to resort to the homes of their friends or to municipal social services. For Lucía Fernández, that is the real drama: after being homeless, where to go? How do you survive?

Change of background

Despite seeking solutions to deal with the situation, change needs to be deeper. Housing policies must be rethought, conditions of access to public housing must be analysed, social housing must be promoted, empty housing must be taken into account and tax controls must be carried out, the possibility of occupation must be considered. All this should serve to reflect on property and the life model in general. “Mortgaging to obtain the right to housing, supporting labor exploitation to pay the mortgage… It is a wheel that is well studied to satisfy the interests of capitalism!”, the members of the platform lament for a dignified Secure Home, but it is the starting point for another report.