Spanish banks repossessed 30,000 family homes in 2012

Rising mortgage foreclosures and the eviction of families from their homes has become a burning social and political issue in Spain of late. But the debate on how to address the problem has been clouded by a lack of accurate figures. In order to remedy this, the College of Property Registrars has carried out a study.

According to the report, which the college released on Thursday, the number of first homes taken over by banks in 2012 because of non-payment of home loans amounted to 30,034, or 115 a day. The study received responses from 934 registrars’ offices throughout Spain, about 85 percent of the total.

The majority of families whose homes were foreclosed on ended up being evicted with only a minority being allowed by banks to stay, paying monthly rent to do so.

The college’s figures exclude garages, offices, storage spaces, and industrial and commercial property. They also apply only to individuals, excluding property owned by corporate bodies. The number of first and second homes foreclosed on by banks last year amounted to 38,778, of which 77 percent were first homes. “This is without doubt a very significant figure as the loss of the family home has a much greater social impact than that of a second home or other types of property,” the report says.

The college’s figures contrast with those released by the General Council of the Judiciary (CGPJ) for last year, which showed that there was a total of 91,622 foreclosure proceedings on all sorts of property handled by the courts. Of these, 70,257 ended in ownership passing to banks.

The banks themselves estimated that foreclosures on the family home amounted to between 4,000 and 15,000 over the past four years.

According to the college’s report, Madrid, Valencia, Andalusia and Catalonia were the regions most affected by mortgage foreclosures. These were also among the regions that were the main focus of a housing bubble that burst around the start of 2008.

Of total foreclosures, 36.9 percent were on first homes owned by foreigners, but in the case of Madrid this figure rises to 59.2 percent. By nationality, 8.8 percent of the cases concerned Ecuadorians followed by Moroccans (5.5 percent), Britons (2.9 percent) and Romanians (2.8 percent).

The college’s figures on dation in payment – a means of cancelling a mortgage loan by handing over the keys of the property to the bank – are also a source of interest as lenders have come out firmly against the introduction of a law allowing this practice on the argument that it would encourage a “culture of non-payment” of mortgages.

The Mortgage Victims Platform (PAH) pressure group gathered one-and- a-half million signatures in favor of introducing legislation on dation in payment and presented its request to Congress in the form of a Popular Legislative Initiative.

According to the college’s study, there were 11,441 cases of dation in payment on the family home last year. “Despite the apparent scant use of dations, they represented a fifth of all mortgage foreclosures last year,” the study said. “The figures show that that they form part of normal banking practice, although recourse to them may vary according to individual banks.”

Experts say dation is a practice that is normally exercised in situation of very poor people where the banks reckon it will be impossible to recover a loan. Foreigners accounted for 38.8 percent of all dations last year and the regions where this practice was most in use were Madrid, Catalonia, Andalusia and Valencia. Ecuadorians also headed the list of cases involving dations with 11.9 percent of the total followed by Morocco (5.1 percent), Romania (3.5 percent and Colombia (2.5 percent).