Please, take my home

In Spain, indebted immigrants plead for leniency on home mortgages

Jelena Kopanja (New York University)September 28, 2009 10:12Updated May 30, 2010 12:09

Women rest after arriving to Madrid on the 10th day of their walk from Valencia, Spain. (Jelena Kopanja/GlobalPost)

MADRID, Spain — Federman Heredia hopes the bank will take his home.

It would be better if the government deferred his mortgage payments for two years. But they haven’t. So Heredia, who hails from Ecuador, walked more than 250 miles from Valencia to Madrid with 19 other homeowners unable to meet their monthly obligations to plead for leniency.

Bleak as it is, foreclosure seems to be a hopeful alternative to more and more immigrant homeowners in Spain. Unlike most cases in the United States, in Spain the debt does not end when the keys are returned to the bank.

“When the borrower cannot pay the mortgage, the Spanish bank does not only get his house,” says attorney Gustavo Fajardo. “The bank gets the owner’s bones.”

The bank continues to persecute the failed homeowner for the rest of his or her life, says Fajardo of the Americas-Spain Solidarity and Cooperation Association (AESCO) in Madrid that works with approximately 27,000 people who have difficulties paying their mortgages.

If the house value has decreased and the auction does not bring the amount of the original loan, the borrower is liable for the difference. It can be applied against any future earnings and property. One of AESCO’s goals is negotiating foreclosures that terminate the homeowner’s debt. AESCO is also lobbying for changing the Spanish mortgage laws to standardize this practice. So far they have had 4,000 accepted cases.

During the housing boom in Spain, loans were easy to come by, says Fajardo. Buying was comparable to renting. Lending institutions encouraged those who did not qualify for a loan to get guarantors. In some cases, five or six mutual guarantors combined into millions of euros of debt.

These “mortgage chains” were most frequently attached to borrowers in the worst social situations: Mileuristas or young professionals earning no more than 1,000 euros (or $1,500 USD) a month, single mothers, and immigrants. The last group was most adversely affected because they lack social networks, says AESCO’s president Juan Carlos Rois.

AESCO was established as an immigrant organization, but Spanish families have also used its services. Fajardo points out that critics characterize the problem as one of immigrants, incorrectly coloring what is a national malady.

Sixty percent of AESCO’s clients are immigrants, says Rois, but the mortgage crisis shows an inverse ratio: Nationally, 60 percent of the approximately 5 million families in Spain at risk of delinquent loans in the next six months, are native Spaniards, while 40 percent immigrants, says Rois. More than 50 percent of AESCO’s clients are Ecuadorians, the third-largest immigrant group in the country.