11 November 2012

Suicide or murder? Spain's other banking crisis

Last Friday a 53-year-old woman in the Basque Country threw herself out of the window of her 6th floor flat while the bailiffs were coming up the stairs to evict her for failing to keep up her mortgage repayments to La Caixa.  She was a former councillor, married with a 21-year-old son.  None of the neighbours were aware of the family's financial problems.

On 23 October a young man threw himself off a road bridge in Las Palmas, Gran Canaria, after losing his job, his girlfriend and his home in quick succession.

On 24 October a 54-year-old man in Granada hanged himself in his patio after receiving an eviction notice from BBVA.  He had lived in the area all his life, and bought out his brothers' share of the property when they inherited it, but could no longer afford the repayments from the little he earned running a street kiosk.

On 7 July a 56-year-old disabled woman facing eviction threw herself out of the window of her eleventh-floor flat in Málaga city.  She got caught up on some railings and hung there helplessly for several minutes before falling to her death, watched by over a hundred people.  There was little press coverage, leading to speculation that the news had been suppressed.

Asasinos - murderers
There are probably many similar tragedies, but the National Institute of Statistics stopped reporting the reasons behind suicides in 2010.   However it is estimated that a third of suicides in Spain these days are related to the economic crisis.  Some people consider that the blame falls squarely on the banks, and that these "suicides"  are more accurately described as murders, leading to a graffiti campaign in many cities.

Since the financial bubble burst in 2008, over 350,000 families have been evicted from their homes after defaulting on their mortgage payments.  There is no housing benefit in Spain, and no statutory requirement to re-house people who lose their homes, even though Article 47 of the Constitution states that "all Spaniards have the right to enjoy decent and adequate housing".  Care of the homeless is largely left to charities like the Red Cross.

 Meanwhile, the number of jobless is predicted to reach six million next year, more than a quarter of the working population.  For those still working, wages have been cut by up to 20% in some parts of the public sector.

50-year 120% mortgages on offer
During Spain's property boom, banks were handing out  mortgages to pretty well anyone who applied, including construction workers, immigrants on temporary contracts and young couples on low salaries.  They were even offering loans greater than they value of the property; house prices were rising by 10% a year, much more in some areas.

When the bubble burst in 2008, the building stopped, unemployment rose dramatically and many people could no longer afford to make their high mortgage repayments.

Under Spanish law, homeowners who fall behind with their mortgage repayments see their property repossessed by the lender, but are still responsible for paying off the debt.  There is no personal bankruptcy option in Spain, at least not without a long and costly court procedure.  In their election manifesto the Partido Popular included a pledge to change the law to "allow for debtors to be freed of their debts".  Since coming to power, this appears to have been quietly dropped.

Waiting for the bailiffs in Almería, copy of the Spanish Constitution in hand
Resistance to evictions has been vigorous. The Plataforma de Afectados por la Hipoteca (Platform for those affected by mortgages, or PAH) was set up in Barcelona in February 2009 and has branches all over the country.  Their  "Stop Desahucios" activists have prevented hundreds of evictions, protesting outside banks and blocking the entry of bailiffs.  They have also organised the reoccupation of empty buildings repossessed by banks.  Their long term goal is to have the laws relating to mortgages changed.

Last Thursday, the European Court of Justice’s advocate general, Juliane Kokott, handed down a non-binding legal opinion that criticized Spanish laws regarding evictions, saying they were incompatible with European norms. The ruling came in response to a query from a Spanish court on a 2011 lawsuit over an eviction due to an unpaid mortgage. Kokott said the Spanish system did not sufficiently protect consumers against possible abusive clauses in mortgage contracts.

Non-violent civil disobedience by PAH members outside a bank in Málaga
Meanwhile society is coming up with its own innovative solutions.  Last week the Mayor of Santa Cruz de Tenerife, José Manuel Bermúdez, carried out his threat not to work with banks who failed to negotiate terms with defaulters and withdrew 1.5 million Euros from the city's account with Bankia (the same bank which has been bailed out with billions of euros of taxpayers' money).   Bankia swiftly reversed its decision to evict three families in the town.  One was that of Carmen Omaña, a Venezuelan whose husband had left her and her children after she was sacked from her job as a domestic cleaner.  Carmen had been on hunger strike for five days outside the branch, accompanied by PAH activists and local councillors.

Carmen and her childen will be rehoused at a rent she can afford
Leaders of the Spanish Police Union, the SUP, have just confirmed they will back officers who refuse to take part in evicting people from their homes.

Prompted by the national and international reaction to the suicides (much harder to ignore than street protests), the Spanish government has put together a "task force" to examine the problem of evictions.  It is not expected to report until January 2013.  In the meantime banks are being requested (not ordered) to freeze all foreclosures currently under way.

Changes in the law will come too late for Amaia Egaña in Barakaldo ...
... too late for José Miguel Domingo in Granada ...
... and too late for Isabel in Málaga.

1 comment:

Mr Grumpy said...

A pretty grim reality of the economic climate in Spain at the moment. And sadly, I can't see things getting much better anytime soon. Very interesting and well written.