A first step

The decree approved by the government on Thursday is an adequate response to the national emergency triggered by growing cases of evictions in Spain and the resulting social unrest. The two-year moratorium on evictions for the most vulnerable individuals about to lose their homes, or those who got to that point because of the serious economic crisis, was a demand that required a swift reply. In fact, commercial and savings banks had already reached a similar decision.

Many lenders are taking a very careful approach to this dramatic situation. The decree could fall into the same mistake that was committed with the Code of Good Practices that was introduced last March because strict conditions are required in order to be eligible for the moratorium. But the fact that the income ceiling for affected families has been raised to 19,200 euros a year, besides taking other personal circumstances into account, means that its effects will reach more people.

The creation of a stock of low-rent housing for those who have already lost their homes is a fair initiative that will bring mitigating measures to those who did not make it in time to avoid eviction.

However, this is simply a first step that needs to be developed further, and urgently at that. Many of those tens of thousands of evictees were victims of the crisis, but also of a legal framework that allows lenders to exact exorbitant late fees and impose one-sided clauses.

It is essential to make that deeper change, also because the general advocate of the Luxembourg Court of Justice’s forceful report against Spain’s mortgage legislation very likely means that European judges will soon be expressing themselves in a similar way.

It would be a historical error not to ride the current wave of 95-percent popular support for anti-eviction measures in order to reverse this situation.

The government has promised a bill whose generic goal will be to improve the way home auctions, late charges and appraisals are conducted. Such a project should be pushed through using fast-track rules and ensuring that it does not get watered down along the way because of Thursday’s temporary measures, which will no doubt reduce social alarm for a couple of years.

As Economy Minister Luis de Guindos said, individuals in Spain pay their mortgages. Default rates barely make up three percent of the total.

The main problem for Spanish banks is not individual mortgages, but loans to developers. That is why it is important that legislative changes do not bring added risk to lenders, which are themselves mired in the most delicate moment in their entire history.

There is no denying that these arguments are carrying weight with legislators seeking to produce a more balanced law, but these figures must be taken into account to keep an unwavering eye on the final goal.