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TOP NEWS - Worldwide Kingdom/Revival NEWS
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Posted: 09/11/2012 at 6:09pm | IP Logged Quote News Room

Spain's Mortgage Fiasco Leaves Middle Class Homeless

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CBNnews.com

MADRID, Spain - In Terrassa, near Barcelona, squatters, known as "okupas," are occupying an empty, new apartment building.

They have nowhere else to live, so they live there, illegally. One of the squatters, a father of two young children, said it's their only choice.

"There are lots of people that are occupying, who are kicking the doors of the buildings down because they don't have another option," Guillem Domingo, who heads a group called Platform of People Affected by Mortgages, said.

Like the other squatters in the building, 35-year-old Nicole Polanco is unemployed, having lost her job as a nurse's assistant.

"You can't just live on the street," she said. "There are so many empty buildings that will never have occupants, whether through selling or renting."

An Economic Abyss

Spain is not Greece -- yet. It is the fourth largest economy in Europe. But like Greece, Spain's middle class is falling into its own economic abyss.

The virtue of home ownership was pushed on Spaniards by the Spanish government and until recently stood at 80 percent, the highest in Western Europe.

The bottom began to fall out of the real estate market in 2007, with official figures showing 25 percent in housing value erased in the subsequent five years.

But observers say it's worse than that. And the depression underway in Spain has pushed everything over the edge.

"Spain, not only the banking sector but also the government sector, is about to go into bankruptcy," economist Juan Ramon Rallo, at King Juan Carlos University in Madrid, said.

A Second Greece?

Much of the media portrays Spain's crisis as only a banking crisis from the collapse of a real estate bubble. There are 2 million unsold new housing units.

The number of bad loans has reached an 18-year high, with one collection agency sending out debt collectors dressed as monks to try to appeal to the consciences of the debtors in this historically Catholic nation.

But Spain's problems are much deeper than a banking crisis. Unemployment is almost 25 percent, with an astonishing jobless figure for adults under 25 of 53 percent. The economy has shrunk for the third straight quarter and vital capital is fleeing the country.

Experts are worried that Spain will become Greece.

With one in four unemployed, more and more families are losing their homes. Some groups, like Platform of People Affected by Mortgages, are trying to prevent evictions and force banks to allow the homeless to live in unsold housing.

Mortgage Fiasco

Many Spaniards have signed mortgages they must pay off, even after they've lost their home to foreclosure.

By law, when a home is foreclosed in Spain, the owner owes mortgage payments until the house is re-sold by the bank.

Spanish banks are reportedly unloading repossessed properties for 60 percent of the original mortgage, and the first homeowner then owes the difference.

In June, Spain's Parliament rejected a law that would have allowed about 300,000 homeowners who have had their homes repossessed to be free of their debt. The banking industry warned this would collapse the financial system. They were probably correct.

Spain's mortgage rules mean financial ruin for many, including one woman CBN News talked to in Terrassa who was fighting to save her home.

"I will fight until the last moment. If they take my house, I'll go back into it because if I have to pay the mortgage for the rest of my life anyway, then I will stay in my house and they can throw me in jail," she said.

Disastrous Spending

Rallo said much of Spain's suffering could have been prevented if the Spanish government had not gone on a spending binge during the boom years near the turn of the century.

"If we hadn't increased spending between 2001 and 2007, we would not have a deficit now, even with the banking crisis and high unemployment," he said.

During the good years, the Spanish government was also blowing $15 billion annually on a disastrous "green Jobs" program that managed to increase unemployment by raising the cost of energy.

Now Spain is paying the piper, or, Spanish families are paying. After he lost his job, Manuel Barrue fell behind on the mortgage of his family's dream home.

After CBN News visited them in the little town of Vila-Real near Castellon, they lost their home but are stuck with a mortgage they still have to pay.

Barrue's dream of a home for his wife and daughter is long gone, perhaps gone forever.

"We were thinking this would be our house for life," he said. "But it's not and there's nothing we can do. God will say what happens."

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