Dick Dasterdly

....for deep in debt households, maybe not so good for the banks, should it come to pass.

http://elpais.com/elpais/2013/06/09/...65_228936.html

jimenato

Isn't that the same in the UK?

Lynn R

I was always under the impression that it was, I remember reading about cases where a mortgage lender which had repossessed properties being accused of not fulfilling a duty to obtain the best possible price, but just getting them auctioned off (or even in some cases doing sweetheart deals with investors) for a cheap price, leaving the original buyer with a larger debt which they remained responsible for.

jennieJ

What difference does that make ? Surely we are concerned with Spain:huh

Or it is a 'if you think it's crap here, it's even worse in the UK' comment ?

We attempted to buy a repossession in the UK a few years back and their was legislation to stop the bank/building society/estate agents from flogging it off below market value.

amideislas

My understanding is that the EU demanded that Spain prohibit banks from foreclosure terms demanding the mortgage holder pay the full amount of the mortgage, even though the bank retains full ownership of the property.

In other words, you don't get your equity back if you are foreclosed upon. The bank takes the house, sells it, but you're still on the hook to pay the full mortgage. So the bank can make almost double if they foreclose and sell. This, by definition, is a clear conflict of interest. Yet, until recently, it's been perfectly legal.

EU now says "get your banks trading fairly, or we won't be buying any more of your worthless bonds at twice their value".

bobd22

Which has to be a good thing no matter which country.

agoreira

You godda laff, ain't you? How many times have we seen, "whats that got to do with Spain" if someone suggest something might be a tad better in UK, but seemingly it's OK to try and rubbish UK. ;-) Even if they haven't got the facts correct.

pete_l

The bank sells the house to clear the outstanding mortgage that it holds - the house being the security against which the loan was made. If there is money left over after that has been done (and the bank's costs paid) then that goes to the mortgagee. If not, there's still a debt to be paid.
Nobody "makes double" ... all that happens is that the bank gets back whatever it can against the loan it made - it certainly never makes a profit on the process.

jimenato

No - it was a straightforward question.

The article is saying that the EU parliament is censuring Spain for its banking/mortgage practices. This surprised me because, as described in the article, they are the same as I understand them to be in the UK.

So why is Spain being pulled up for it when the UK isn't?

jimenato

Sorry - who is trying to rubbish UK and what facts aren't correct?

jimenato

That is my understanding too.

amideislas

Erm... yes, that's how the mortgage process works in most civilised countries. But until recently it wasn't how it worked in Spain.

Because Spanish mortgage law was unfair.

jimenato

I believe you are describing correctly what happens in the UK. I believe amideislas is correct about the Spanish rules.

jimenato

Not as described in the article - it was the same as the UK. Was the article wrong then?

amideislas

All I know is that there are quite a few people paying off mortgages for houses that they don't live in or own, because they were foreclosed, the houses were re-sold by the bank, but the victims are still on the hook to pay the entire mortgage, because mortgage law allowed the banks to assume full ownership of the property in a foreclosure, without any obligation to credit the equity of the foreclosed mortgage holder. It was written into many mortgage agreements.

It was a big scandal here a couple of years ago. I haven't bothered to google the specific articles, but I recently spoke with an immobiliaria friend who said Spain now prohibits this kind of predatory mortgage policy due to the said EU clampdown (I remember reading an article about it some time ago).

She also mentioned that most of the victims of these predatory mortgages always had every legal right to appeal for the return of their equity, but only if they filed the appeal prior to the foreclosure.

But following a foreclosure, most victims were focused on how to pick up the pieces of their shattered lives, were left with little money, and never knew they had that right, and therefore, many unwittingly and unnecessarily agreed to those terms simply by inaction. Since it wasn't illegal at the time, they now have no recourse.

The good news is that this all seems to be behind us now...