In Spain, Homes Are Taken but Debt Stays

For many Spaniards, no longer able to pay their mortgages, the fine print in the deals they agreed to years ago is catching up with them, the International Herald Tribune reported. Not only are Spanish mortgage holders personally liable for the full amount of the loan, but throw in penalty interest charges and tens of thousands of dollars in court fees, and people can end up facing a mountain of debt. Bankruptcy is not the answer, either. Mortgage debt is specifically excluded here. “Effectively, you can never get rid of this debt,” said Ada Colau, a human rights lawyer who works for Plataforma, a new advocacy group formed both to give legal advice to homeowners and to push for reform of the country’s foreclosure laws. “Other countries in the European Union also have personal debt mortgages, but you can go to the courts and get relief. Not in Spain.” Several opposition parties in Parliament have been pressing for amendments to the country’s foreclosure laws, including letting mortgage defaulters settle their debts with the bank by turning over the property. But the government of José Luis Rodríguez Zapatero has opposed such a major change in lending practices. Government officials say Spain’s system of personal guarantees saved its banks from the turmoil seen in the United States. “It is true that we are living a hangover of a huge real estate binge,” said Marcos Vaquer, who was the under secretary of the Housing Ministry until a government reshuffle last week. “And it is true that far too many Spaniards have excessive debt. But we have not seen the problems of the U.S. because the guarantees here are so much better.” Read more.