‘Very serious threat … to Spain’s entire mortgage market’: Moody’s
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
A bitter, long-simmering conflict finally appears to be reaching its finale in Spain. On one side of the divide are the country’s biggest banks and some of the world’s largest investment funds; on the other are hundreds of thousands of families who lost their homes after the collapse of one of Europe’s biggest ever housing bubbles, together with the many thousands more who face the same fate today or tomorrow.
In Spain, more than in most places, debt stays with you until death do you part; it is never forgiven nor forgotten, and mortgages are ‘full recourse.’ Even when a bank, often with the heavy-handed assistance of the forces of law and order, has repossessed someone’s home, that person could still be left on the hook for thousands, if not hundreds of thousands, of euros of debt.
Most Spanish foreclosure victims end up personally liable for not only much of the outstanding loan, but also thousands of euros in penalty interest charges and tens of thousands of euros in court fees. They can end up owing more than the original mortgage, but with no house to speak of, or live in.
This post was published at Wolf Street by Don Quijones ‘ April 30, 2016.