Spain’s evictions push the defenceless over the edge

On November 9, as the police and bailiffs opened the door of a flat in Barakaldo, Gipuzkoa, to execute a mortgage repossession, 53-year-old Amaia Egaña climbed up onto a chair on her fourth-floor balcony and leapt to her death. Hers was the third suicide in as many weeks shortly before the moment of eviction, and it has apparently triggered a dramatic response on the part of Mariano Rajoy’s government, which announced its intention to suspend all evictions of “vulnerable families”, pending a reform of the mortgage law.

It may surprise the more than 300 households evicted every day in Spain that their constitutional rights are being violated, but among the many promises of social justice to be found in the Spanish Constitution is Article 47: “All Spaniards have the right to enjoy decent and adequate housing. The public authorities shall promote the necessary conditions and establish appropriate standards in order to make this right effective.”

This idealistic view of the social basis of Spanish justice contrasts strongly with the reality of social rights in Spain under an unreformed mortgage law that predates the constitution by 70 years.

Just a day before Egaña’s death, the Attorney General of the European Court of Justice Juliane Kokott ruled that the Spanish law on mortgages does not comply with European regulations on consumer protection: “It does not constitute an effective protection against abusive contractual clauses, given the fact that the consumer… must suffer defencelessly the foreclosure of his mortgage and the consequent forced sale of the home, the loss of property and subsequent homelessness.”

This assessment of the fundamental unfairness of Spanish mortgage law echoes even harsher comments from Spain a few days earlier. The conservative bishop of San Sebastián, José Ignacio Monilla, said: “We are seeing how the banks continue to evict families at the same time as these financial groups pile up tens of thousands of empty homes which they cannot sell or rent. It is immoral as well as absurd”.

La Vanguardia columnist Fernando Ónega speaks for many: “A country which allows 400,000 families to be thrown out of their homes for mortgage default is an unjust country. But a country which does not rise up against the legality that allows that same home to be passed on to the ‘bad bank’ at half price is a country of cowards”. Far from being leftist radicals, these commentators represent the many moderate voices that are increasingly appalled at how little protection is afforded to homeowners.

Why Spain?

But in all countries mortgage default can lead to eviction, so is there anything particularly unjust about the situation in Spain? Ada Colau, spokesperson for the pressure-group Plataforma de Afectados por la Hipoteca (PAH) identifies three areas that are out of line with prevailing mortgage laws in OECD countries. Firstly, once an eviction process is underway, the law does not allow it to be suspended even if there is a legal dispute about the terms of the contract. Although other Spanish legal processes can take years or even decades to be resolved, the foreclosure procedure is fast-tracked and automatic, resulting in the eviction of the defaulter within six months.

Secondly, the mortgage lender is entitled in Spanish law to the full value of the loan plus interest, so the defaulting homeowner, now homeless, will be saddled with a crippling debt. The normal situation in most countries, that the repossession of the home by the lender constitutes a cancellation of the debt (known in Spanish as “dación en pago”) is an extremely rare outcome in this country. Because personal insolvency is not a realistic option, the individual has no way to escape the burden of debt, says Colau: “They are buried for the rest of their lives”.

Thirdly, alternative methods of resolving mortgage default such as mediation or converting the mortgage agreement into a rental contract are almost unknown, claims Colau, even though they were introduced under the government’s new and voluntary “Code of Good Practice” for banks.

“If Spain does not fix the mortgage regulations, the EU will do it for them,” says Colau, who argues that the Kokott judgement, combined with a massive campaign of protest organised by her group and its allies, have forced the government to take action, much against its own wishes. She holds out little hope for the reform process to be agreed on before Christmas between the governing Partido Popular (PP) and the Socialist opposition, and is particularly scathing about the Socialists’ late arrival on the scene, pointing out their failure to reform the law when they were in power: “Both parties have blocked any initiative for reform during the last four years… I feel an absolute lack of confidence in their promises.”

There is certainly evidence for her claim that Rajoy’s government has had no wish to take action on this issue, as no less than three different proposals have been blocked by it this year. First, the minority party United Left’s proposed bill on mortgage reform was voted down without discussion, then in June the PP and Socialists voted to defer discussion of a popular initiative presented by the PAH platform and backed up with more than half a million signatures.

An “aggressive” law

Then just two weeks ago, a commission of expert magistrates presented their report to the CGPJ judicial oversight body with 18 proposals to ameliorate the injustices of the present law. The expert commission confirmed that the Spanish legislation was “extremely aggressive” with debtors, and called for urgent implementation of its recommendations. However, this report was quashed without discussion after a bloc of PP delegates voted it down.

The same delegates who voted to suppress the report, led by PP hardliner Concepción Espejel, are the same who voted to confirm the “golden handshake” of €208,000 for disgraced former delegate Carlos Dívar, who was forced out of the CGPJ for fraudulently claiming travel expenses. For Colau, this represents perfectly the direction taken by the politicians in power, who have not moved in four years to protect the ordinary citizen. “On the contrary, they have just concentrated on approving bank bailout after bank bailout, pouring billions of euros into the hands of irresponsible banks, without demanding anything in return,” she says.

Of the proposal made by the suppressed CGPJ report that a part of the public subsidies received by the banking sector should be channelled into helping the struggling homeowner, Colau says: “It’s too common-sense to be approved by political parties who have consistently acted only for the benefit of the banks, their friends and masters”.