In Spain, Not Even Death Will Save You from Your Mortgage
On February 15, a retired married couple in Mallorca, Spain committed suicide together, leaving a note behind stating that they were going to lose their home. This extreme response to financial ruin sadly isn’t unique in Spain, where several such suicides have made the news recently, including that of a 46-year-old man in Alicante and a woman who jumped out a window. What is driving the Spanish people to such desperation, and why isn’t anything being done about it?
The financial situation in Spain is grim, like that of many of its fellow European Union members. Over 1/4 of the population is unemployed, with the youth rate even higher; about half of young adults in Spain have no jobs. Young people are moving back in with their parents to make ends meet because they cannot survive on their own, while others are leaving the country in the hopes they will be able to find work elsewhere.
Spain was actually chosen as the site for a viral marketing stunt offering 100 Euros (roughly $130) for free to participants who walked up to a cash machine and watched a short video. The catch, other than the video, was the requirement that they share the money, something Spaniards have already been doing in their own communities with the limited resources they have. This is the same nation, after all, where residents protested high taxes on cultural resources (things that should be freely available to all rather than restrictively priced so they’re only available for the wealthy) by paying for theatre tickets with carrots.
The country also experienced a substantial housing bubble along with many other regions of the world in the early 2000s, with property prices inflating very quickly. Many people bought homes on the assumption that their incomes would remain stable in high, or refinanced properties to take advantage of their increased value. When home values dramatically fell, they were left holding the bag.
To compound the financial problems in Spain, the country is also wrestling with archaic financial laws dating back to the early 1900s. Under those laws, the handling of mortgages, repossession, and bankruptcies is quite strict: borrowers who can no longer make payments on a property are still liable, even if they attempt to surrender the house or declare bankruptcy. When a bank seizes a property in foreclosure, it can demand the balance of the loan if it’s unable to recoup the cost from the sale of the property.
Tragically, given how many people are committing suicide as they end up underwater on their homes, not even death erases existing mortgage loans under the law.
All isn’t lost, though, because something is being done. Two things, in fact.
The first is that the Spanish government implemented a moratorium on some evictions late last year. Slated to last for two years, the moratorium addresses the “most needy,” and thus the most vulnerable. While many activists feel it doesn’t go far enough, it’s at least a positive start in terms of putting the worst of the evictions in check while the nation works on a long-term solution, which ideally will involve a radical reworking of Spain’s financial laws to address their obvious problems.
The second is that the Spanish people are taking to the streets to demand reform, and they’re holding public leaders accountable until they comply. Major Spanish cities are dealing with floods of protesters in their streets as people call for safety and security for the poor, and interest in housing advocacy and activist organizations is increasing.
While changing the laws will take time, the moratorium combined with activists actively working to prevent evictions and protect people is a huge step in the right direction. And the revolt in Spain over unfair housing laws and financial abuses is one activists in the United States are watching closely as they fight their own foreclosures at home.
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