OPINION
Text in which the author defends ideas and reaches conclusions based on his / her interpretation of facts and data

Hell and good intentions

The liquidation of a mortgage debt by handing over the keys seems to pose legal problems in Spain that don't arise elsewhere

Many things in Spain seem inevitable, but aren't. For example, the thousands of evictions that are going on throughout the country. According to accepted data, in crisis-hit Spain there have already been some 150,000 "mortgage executions" - an eloquent term for evictions due to non-payment of mortgage installments - and there are another 238,000 pending. Nothing could be done about these evictions, we were told, because it would endanger the stability of the system.

With the best of intentions, the government is now saying that it is possible for the banks to make some small gestures of goodwill. The economy minister, for example, considers the interest rates that are charged when negotiating a delay, or when unpaid installments have stacked up, to be "clearly excessive." Rather than excessive, it could be argued that these rates are downright usurious, given they are four or five points above the norm. That's to say, if the loan was granted at three or 3.5 percent, you have to pay between seven and eight percent for the tardy payments. Can this scandalous situation really not be avoided? And I don't mean through goodwill, but by means of a law, or indeed intervention by the Bank of Spain.

The liquidation of a mortgage debt by handing over the keys - that is, the surrender of the mortgaged property - to the bank seems to pose legal problems in Spain, despite the fact that it is perfectly acceptable in many countries around us. The Spanish banks say they are prepared to consider such a practice in certain exceptional cases: when the client in question has no assets at all, not even a car; or when the client is unemployed and is no longer eligible for unemployment checks. Oh, and assuming that everyone in the family is in the same situation.

The truth is that if a client fulfills all of these conditions, what they are likely to need is not a mortgage cancellation, but a hospital bed. It is clear, moreover, that the bank would never get its money back in such circumstances, meaning that the gesture of goodwill is one of pure pragmatism, with a sugar coating of public relations. The option of canceling a mortgage debt by simply handing over the keys is still as distant as ever in Spain.

The problem of these evictions could perhaps be better handled by giving judges who are responsible for signing the eviction order the power to force banks to accept more affordable rates during certain periods of time.

This model works in the liberal United Kingdom, and it helps to diminish the real number of evictions. As long as the property owner accepts the debt contracted, and confirms their intention to go on paying a sum that is "reasonable" in their new circumstances, the judges do not authorize evictions, but rather opt for new agreements, which may last for several years. This is often the case should the paperwork presented reveal that the initial assessment of the property made by the bank was "deficient" or "malicious" - as could certainly be demonstrated in many evictions.

Whatever the case, the decision should not depend on the supposed "goodwill" of banks (after all, can financial institutions have a will, be it good or bad?). Nor should it be dependent on a code of good practices. A quick look at the Specific Criteria on Good Practices that appears on the Bank of Spain's website is enough for anyone to abandon all hope (www.bde.es/webbde/Secciones/Publicaciones/MemoriaServicioReclamaciones). Anything that falls short of being clear, understandable, legal regulations runs the risk of becoming pure publicity and window dressing. According to the economy minister and bank spokespersons, there are things that can be done "with goodwill." Do them by law instead, so that we know where we stand and feel safer as a result, given that we will not be depending on someone's discretional goodwill.

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