Mortgage collection tactics under scrutiny

It is a sad story that is told over and over again. They have been laid off, have big bills to pay, and live with the pressure that if they don't meet their mortgage payments, they could be out on the streets.

At the same time, the bill collectors call them at every hour of the day, at work, and even phone their families. Sometimes the collectors make intimidating threats, telling them that if they don't pay up, their names will be put on an official deadbeat list, their wages will be seized, their parents' home will be embargoed, their grandmother's pension could be taken, and the custody of their kids will be put in jeopardy should they lose their home.

These are practices that have been reported by the group Platform for those Affected by Mortgages. The Barcelona-based organization, which reports that there were 50,000 foreclosures in Catalonia alone last year, tries to help people who are desperate over their financial situation.

On Wednesday, the regional parliament in Catalonia agreed to study a recommendation to allow people who are in dire financial straits to cancel their mortgage debt by simply giving their homes back to the bank.

In Madrid, Prime Minister José Luis Rodríguez Zapatero told lawmakers yesterday that the government was willing to study measures that can help people but said he was against any recommendation to allow them to cancel their debt by returning their homes because it could affect the solvency of the banks.

"We are willing to take additional measures," the prime minister said.

The Platform for those Affected by Mortgages is demanding that changes are made to the mortgage laws.

The brother of Blanca, not her real name, earns no more than the 420 euros he receives in unemployment checks each month. Meanwhile, his monthly mortgage payment is 1,450 euros. The bank has already put the home on the auction block. It is just a matter of time before he is thrown out.

He has tried to commit suicide on three occasions. Blanca has come to his rescue by paying 1,000 euros of the payment from her monthly salary of 1,200 euros. "I am two months behind. I never let the payments go three months late," she says.

Blanca has a job, but is afraid of losing it. "They have told us that they will take everything away from us - even saying that we will have to return to Ecuador." She and her brother bought their house during the country's property boom. They signed the contract at 10pm at someone's home, she recalls.

Employees at the different financial institutions are quite familiar with these practices. The threatening phone calls are sometimes made from the same office, other times the task is given to a collection agency.

Oriol worked at a big savings bank but had to leave. "Peddling products that you know don't work, giving credit cards to people who don't know the basic rules, and to see how mortgages are signed sometimes four or five a week - I couldn't stand it any more," he says.

Manel Ruiz, the president of the Catalonia Consumer Union, said it was sad to hear about such threats from the financial institutions, but most of the time they have been difficult to prove.

Even the Association of Bank and Insurance Customers (Adicae) is concerned about these illegal practices. "They are acting illegally because they don't respect the data-protection laws, and go about their business without any sanctions," says Jofre Ferrés, Adicae secretary general in Catalonia. "They call family members early in the morning, and try and shame people who are in the midst of a crisis."

In other countries, Ferré says, there are laws to protect consumers who are late with their payments.

The burst in the housing market bubble has also affected appraisers. Teresa, not her real name, used to work for one of the region's biggest appraisal companies. "I used to appraise 30 apartments a month, but now I am only doing about eight, and they are foreclosures."

Marta, another fictitious name, is also behind in her mortgage payments, but doesn't lose sleep over it. Her apartment is expensive - 400,000 euros - but she says that as much as it is her problem, the bank should also share the difficulties. She is a freelancer, who is at the mercy of her clients - if they don't pay her, she cannot pay the bank.

"This is a chain and the bank knows it. They know how much I earn and how much I spend. I am not a deadbeat by choice. I am paying what I can," she said.

The creditors call her almost every day at work, and sometimes they get nervous at the end of the month. Last December 31, they screamed at me, saying that the Bank of Spain was coming in to review their assets - they make it sound like it is your fault."

Josep Fillol is also taking a stand. Despite the threats, he says if you get tough with them, they will leave you alone. "No one forced me to sign the mortgage, I know," he says. "But yes, they did push me: mediocre laws, high-risk products, small print... This is like musical chairs. Everyone is happy at first but no one realizes there is one who will be left standing."