Spain Postpones Deal on Foreclosures as Talks Drag On
Spain’s government headed toward a deal with the opposition to prevent evictions in cases of mortgage default, as Prime Minister Mariano Rajoy battles growing social unrest.
After six hours of talks late yesterday, government and Socialist party officials agreed to reconvene at 4:30 p.m. today to thrash out a decree the Cabinet plans to approve on Nov. 15, said spokespeople for the government and opposition, who asked not to be named in line with policy.
“I’m confident there will be an agreement today,” Alfonso Alonso, the ruling People’s Party’s parliamentary leader, told reporters in Madrid. “The issue can’t wait any more,” he said. “The bones” of a deal are in place. he said.
Rajoy, who faces a general strike tomorrow, pledged measures to stem evictions on Nov. 9 after a woman committed suicide as officials tried to seize her home. Rajoy is trying to respond to outrage over foreclosures amid a taxpayer-funded bank bailout without inflicting further losses on a financial system crippled by the collapse of a debt-fueled housing boom.
“No family in good faith should end up homeless as a result of the crisis,” Economy Minister Luis de Guindos told the European Parliament in Brussels yesterday.
Amaia Egana became the second person in the past month to commit suicide in Spain over an eviction when she threw herself from her apartment in Baracaldo as officials arrived to change the locks on Nov. 9. Egana, a 53-year-old former city councilor, worked as a human-resources director for the public bus company in the northern region of Vizcaya, El Mundo reported.
Spain’s banking association pre-empted the bipartisan committee yesterday, announcing a two-year freeze on repossessions in cases of extreme need for “humanitarian reasons.” It didn’t give details on what that meant. The measures being discussed by the committee include grace periods, PP No. 2 Maria Dolores de Cospedal said yesterday.
Officials from the PP, which has enjoyed a parliamentary majority since a landslide election win last year, have repeatedly said they want the Socialists’ support for any measures. The opposition party, which has called for a broad overhaul of mortgage laws, is still reeling from its worst electoral defeat after former Prime Minister Jose Luis Rodriguez Zapatero abandoned traditional Socialist principles and used one of his last Cabinet meetings to grant a pardon to Banco Santander SA (SAN) Chief Executive Alfredo Saenz.
Some 400,000 homes have been foreclosed in Spain since the collapse of the decade-long property boom five years ago. The number is set to increase without government action after unemployment reached a record 26 percent in September. Banks have more than 600 billion euros ($762 billion) of mortgage loans outstanding. They have a default rate of 3.1 percent, compared with 10.5 percent for lending as a whole, according to data from the Bank of Spain, which predicts further increases in bad loans.
“There will be pressure to try to limit the number of mortgage evictions and iron out some of the inconsistencies in the legislation,” Daragh Quinn, a banking analyst at Nomura International Plc in Madrid, said in a phone interview. “It could cause increased losses on mortgages for banks and reported rates of NPLs if it affects their ability to recover assets.” NPLs are non-performing loans.
Spanish banks, some of which are set to benefit from a European rescue package of as much as 100 billion euros and the creation of a so-called bad bank backed by taxpayers, have become the focus of public outrage over foreclosures.
In a Metroscopia poll published on Nov. 11, 91 percent of respondents said lenders exploit clients’ lack of legal knowledge to insert abusive clauses into mortgage contracts, while 31 percent said some banks have acted in good faith.
“If we bail out the banks, how can we not bail out families?” Socialist Party No. 2 Elena Valenciano said in a Nov. 7 interview on Telecinco.
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