Spain lacks data on evictions linked to mortgage defaults, Bank of Spain Governor Luis Maria Linde said, after the government announced emergency measures to prevent people losing their homes.
“We don’t have good statistics on the judicial side, on the judicial procedures that affect mortgages,” Linde told reporters in Madrid today. “We don’t have good data on evictions, we lack data on the scale of the problem.”
Spain’s government, responding to public outrage over suicides linked to repossessions, passed a decree last week to prevent low-income families losing their homes. The government hasn’t quantified the impact on banks, which are still reeling from losses caused by the collapse of the debt-fueled property boom five years ago.
Linde said Spain can afford to take “humanitarian” measures to prevent “dramatic” cases of people losing their homes without endangering the banks. Still, any changes to the mortgage law should be carried out with “great care,” he said.
Spanish home loans are usually full recourse, which means homeowners remain on the hook for their debts even after a foreclosed property is sold or confiscated by the lender for less than the value of the mortgage. The Bank of Spain says the incentives created by those rules have held down the mortgage default rate.
The measures passed last week apply to families with income of less than 1,597 euros ($2,045) per month that also meet other conditions such as having at least three children or one child under three, being a single parent with two children or being unemployed and not receiving benefits.
Spain’s bad-loan ratio rose to 10.7 percent in September, according to data from the Bank of Spain, which forecasts the rate will continue to rise amid a shrinking economy and a record 26 percent unemployment. The default rate on residential mortgages was 3.1 percent in June, central bank data show, and about 9 percent of Spanish mortgages have already been renegotiated, according to Sept. 28 stress tests.
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