As more people find themselves victims of mortgage fraud and eviction in Spain, they are banding together to advocate for legal reforms.
Spain is gearing up for profound reforms to its eviction laws driven by deafening public pressure in which immigrants – particularly from Ecuador – stand out as quiet protagonists, both as victims and as advocates.
Evictions have become a social trauma amid a grueling crisis and record unemployment of 26 percent. The visible plight – from suicides to homelessness – has come to symbolize the country’s pain, uniting public opinion from across the political and social spectrum in demands for new legislation.
Many people are furious that the governing Popular Party was quick to bail out its ailing banks with more than 41 billion euro in European-lent funds, but has yet to offer indebted homeowners relief or even a real reprieve from evictions.
Economists, judges, civil society, and political groups have overwhelmingly criticized government inaction and backed reforms. Firemen, municipal and regional officials, policemen, and tribunals are increasingly resorting to civil disobedience, and massive sit-in protests are shielding – even if only temporarily – those threatened by evictions.
And crucial to public demands are immigrant communities – which were specifically targeted by dozens of fraudulent schemes. They were also the first to be affected and the first to legally challenge laws on the grounds they hinder borrowers’ rights by not allowing them to plead their case, even in gross cases of fraud.
The government appears to have finally budged, but is waiting for a European Court of Justice ruling Thursday that is expected to mandate a revision of Spain’s eviction laws. These are “abusive” and incompatible with EU law protecting consumers, according to the court’s advocate general, in a case related to an evicted Moroccan who was not allowed to challenge what appeared to be predatory clauses in his mortgage.
The Ecuadorian People’s Defender Office, a national ombudsman, also sued Spain in the European Court of Human Rights in January over similar complaints. As many as 15,000 Ecuadorian families could be affected, Ombudsman Ramiro Rivadeneira Silva says.
“The Spanish government has not taken the appropriate measures to protect the rights of citizens,” Mr. Rivadeneira says, referring to the legal impediments that borrowers face. “Spain has a pending debt with society. We would like Spain’s political forces to change this situation, but if not, we will wait for the courts.”
Public opinion will weigh more than the courts, though, in the scope and timing of the reforms. Tens of thousands marched in 50 Spanish cities in February and more than 1.5 million people petitioned in support of a citizen-tabled legislative bill that seeks a complete overhaul of Spain’s century-old mortgage laws.
Aida Quinatoa, a 48-year-old Ecuadorian, was caught in a fraudulent scheme along with as many as 700 other mostly Ecuadorians. In 2004, a real estate firm tendering to immigrants bullied her into buying an overpriced, minute apartment she didn’t want, under the threat of losing 25,000 euros she put down as a deposit for another much larger property she was promised.
Then, the firm conditioned the unwanted – but apparently inescapable – mortgage, coercing Mrs. Quinatoa and her husband to sign as guarantors in two separate mortgages for couples they hadn’t even met, again under the threat of losing their life savings.
The cross-guarantee scam leveraged risks for the lender, but condemned those involved to very likely evictions in the future. Even if a family was never late on their payments, their apartments ran a high risk of being seized in case the others defaulted on mortgages they co-signed, in a domino effect.
“I had never been late on a payment, and one day in 2008 a bank called me to tell me they were coming for my apartment and my salary. Then we found out many more of us where in the same situation. So we started meeting to find ways to defend ourselves,” Quinatoa says.
So far almost 50 families have joined a criminal suit. The firm’s owner was arrested and released with charges, but the judge so far has not approved an injunction of evictions.
Quinatoa is not just a victim – she also leads an association of Ecuadorians affected by multiple forms of fraud or predatory mortgage terms. Her association has also been instrumental in the broader Spanish civil society movement to force the government to reform laws.
“There had to be deaths for the government to consider the reforms,” she says. Ecuadorians “have overcome discrimination, the stigma that we are worthless and don’t pay or debts, and that we couldn’t change this. But we are doing it.”
Spanish mortgage laws allow lenders to impose payment terms and to quickly repossess properties in case of unpaid mortgages. After the eviction, banks keep the properties but can still hold owners and their descendents accountable for debts, even in case of death.
The burden has kept Spanish loan delinquency low, to the benefit of banks, but it has also galvanized public opinion against perceived government indifference to suffering in poor and middle classes.
Eviction proceedings have soared since 2007 to some 450,000, according to the most recent court data, although that includes all types of properties. The number of those ending in evictions increased by nearly 135 percent in 2012 from the year before, pointing toward worsening trends.
The PP though has so far delayed reforms, because in this juncture, they would likely trigger an onslaught of mortgage defaults, a warning echoed by international credit rating agencies. The higher delinquency would hurt banks and their ability to finance themselves, and by extension could seriously undermine an economic recovery.
The resulting political and social upheaval, though, also carry indirect economic consequences as thousands of individuals and their families are condemned to a life of poverty, undermining economic growth over the long term and delaying a recovery as consumption suffers.
Once the European Justice Court ruling is out, the government intends to negotiate the reforms to the law with other political parties. Which is why Quinatoa knows her battle is far from over.
“This is a daily struggle,” she says. “No government has helped us. But we’ve managed to stop hundreds of evictions. There is more public support each day and more creative ways of fighting back. This is the only reason I’m still in Spain.”