Spain’s jobless immigrants take on banks over mortgages

When the building sector collapsed along with the market, they lost their livelihood and had no way to make payments on houses that were impossible to sell. Prices have been falling for four years with no end in sight.

"I tried by all means to keep this flat because I felt like it was my home, it would be my home for the rest of my life. I wanted to continue paying as everybody does, I was on track with the installments until that fatefull moment when Spain's real estate bubble burst," Luisa told Reuters.

Luisa, 52, arrived in Spain 20 years ago from the Dominican Republic. In the year 2000 she ran a small company and invested part of her mortgage in the business.

After several months of losses she could not meet her housing costs and decided to shut the business.

With no income, the bank issued the foreclosure order of her apartment for half of the mortgage value, leaving Luisa with 171,000 euros debt. With the help of protesters gathered outside her building preventing her eviction though, she has managed to persuade the bank to give her a reprieve.

Luisa feels angry she was lured into taking out a mortgage on the grounds that buying was cheaper than paying rent.

All of them received money, all of them. All of them profited, the only ones that were affected were us. They sold the idea that having a home meant saving money and that paying rent was throwing money away. If you buy a home it was to save money and now it's turned into a nightmare," Luisa said.

Evictions of people unable to pay their mortgage almost doubled to some 50,000 last year in Spain, from 27,000 in 2008, as unemployment soared to 23 percent, according to the General Council of the Judicial Branch.

According to the Council, more than 150,000 additional families face eviction.

The Barcelona based Platform of Mortgage Victims provides legal and psychological support to people willing to give up their house if their bank will forgive their loan.

Platform has managed to suspend or delay dozens of eviction orders in the last six months by staging protests outside foreclosed homes and by helping people negotiate with their banks.

The highly public "Stop Evictions" campaign fed a wave of defiance against banks and the new government has now pledged relief for borrowers who were preyed upon by lenders that gave out huge loans too freely during Spain's long housing boom.

Many members of the Platform are Ecuadorians who moved to Spain during the late 1990s and early 2000s to work in the booming construction industry not knowing the economic downturn would be putting the breaks on the sector.

Many also felt pressure because they had to demonstrate home ownership on immigration applications to bring their families from South America to join them in Spain.

Ecuador's ambassador to Spain believes lenders took advantage of immigrants. "They knew that these workers and savers had financial backing that's why they (banks) got them into this, that's why they were sought out, seduced. That is why I would like to say that it is unfair to take advantage of their situation now that they are in trouble, they should be helped and we are telling our community to be aware that there are too many wolves disguised as sheep," says Aminta Buenaño, Ecuador's Ambassador to Spain, who has set up a free legal aid program for what she estimates are 15,000 Ecuadorian families in trouble with their banks.

Members of the Platform of Mortgage Victims gather once a week in the daytime for mass visits to bank branches to present applications to have their debt pardoned. They say if they go alone, they get the run-around.

Isabel Lascano and 30 other members of the Platform, met in Madrid's central Puerta del Sol square recently and went together to turn in papers at Bankia bank.

Isabel, 30, and her husband, are both unemployed and stopped paying their mortgage a year ago. Their house is now being foreclosed.

She is desperate for Bankia to accept her petition and pardon her debt, because her cousins, who guaranteed her loan, now have a black mark on their credit rating and have had to cancel their credit cards.

Lascano would like to return with her family to Ecuador, but doesn't want to leave her cousins in the lurch.

"My guarantors are now the ones that are in troubles, because I've assumed my responsibility. I know that regardless I would but I hurt for them because them at one time they did a favour for me and now they are paying the consequences," she said.

All six of the homeowners facing eviction who spoke with Reuters said that their bank or their mortgage broker had inflated their wages in order to get them a loan.

"Thanks to the real state agency and the bank they changed my wage figures so the bank approved my mortgage because with my wages no bank would have given me a mortgage," said German Gonzalo Bastidas.

Banks consulted by Reuters said they have strict controls to screen out fraud on mortgage applications, but that they could not catch all falsifications.

Although there has not been a systematic probe of mortgage practices, public alarm over evictions, sometimes of elderly or disabled people, prompted the new centre-right government to take action.

Economy Minister Luis de Guindos recently asked banks to forgive mortgage debt for properties worth less than 200,000 euros and where all family members are unemployed.

Most of Spain's banks, including Santander and Bankia one of the biggest mortgage lenders in Madrid, said they will respect the new code.

They say they have already renegotiated thousands of loans due to the crisis.