Spain's largest banks promised Monday to halt foreclosures on people "in extreme financial need," The Wall Street Journal reported. The banks didn't say what qualified a person as being in extreme need and it was unclear how many of the tens of thousands of mortgage holders facing eviction would be helped by the announcement.
Spain's two largest political parties, the governing Popular Party and opposition Socialists are attempting to rewrite mortgage laws that presently greatly favor banks over individuals.
In Spain, even people default on a mortgage, they are held liable for any debts remaining after the property is resold by the bank. Laws give the banks wide leverage in foreclosing on mortgage holders and there is no explicit homestead provision, meaning foreclosure proceedings can move forward even if the debtor has no other place to live.
The situation in Spain is dire, the Journal reports. Unemployment is at 25 percent and 3.2 percent of the nation's mortgages -- worth 19.12 billion euros ($23 billion) -- are in default. The number of foreclosures in the first quarter of 2012 nearly quadrupled over the same three-month period in 2011.
Business leaders said banks are in a difficult spot. Already wobbling due to the weight of bad real estate loans, banks are trying to shield themselves from further losses that could force another bailout or put some under. Yet with so many people unable to pay, they may have to take the loss regardless, the Journal reports.
A newsstand owner who was being evicted from his home hung himself and a former politician jumped from a fourth-story window under similar circumstances. The deaths have prompted large media coverage and graffiti on some bank walls calling the owners "murderers." Police officials have said they will not force officers to carry out the court-ordered evictions if they have moral objections, the Journal reported.