June 26, 2008 at 2:29 pm #54114
We are in short in trouble – the mortgage rate on our property has again gone up and we are struggling to meet repayments
The bank is unwilling to help and I wondered if anyone here knew what would happen if they repossessed and how bad ( we know bad but just how bad ) it would get
June 27, 2008 at 7:20 am #84854
Sorry Mirador, this is just an overview of how the Spanish law deals with mortgage arrears and possession cases.
The terms are approximate, it depends of the Court
FIRST STAGE the borrower falls into arrears
At this stage the lender try to contact the borrower to get an explanation about the arrears and start to charge extras such as different interest rates an penalties. Mortgage lenders also attempt to renegotiate alternative arrangements
SECOND STAGE In default. 90 days after the first arrear
Lender’s debt collection department try the last attempt to recover the debt
THIRD STAGE 10-30 days after default
A duly attested summon (Requerimiento Notarial) or certified fax must be sent from the lender to the borrower informing about possession proceeding through the court
FOURTH STAGE Repossession order .One week after the summon. Legal action start against the borrower
The lender’s lawyer try to obtain a executory judgment for the payment of the overdue mortgage and by public auction the mortgage property will be sold.
FIFTH STAGE The Court set a date for public auction 4-16 months after the legal action start.
If nobody bids, the lender will be the new owner of the house for 50% of the property value.
I have to say that the borrower always owe to the bank much more money than the property value. It must be added interest of arrears, demurrage, court costs etc. Although the house has been sold the borrower is still owing a lot of money so the lender will keep pursuing.
If you have a guarantor the lender will start the proceedings against him in order to obtain the rest of the debt.
The new owner of the property is registered in the Land Registry.
SIXTH STAGE Eviction 6 months after the auction
Police Court, officers and a locksmith will evict the borrower. It is very difficult to evict if there are tenants or children and this circumstance is previously notified in the Land Registry. For example divorced couple own the house and one day none of them pay the mortgage. If when they got divorced they submitted in the Land Registry that use the house would be for the spouse and the children the situation is that is quite impossible to evict the family but the debt remains
June 27, 2008 at 10:31 am #84858
Mirador, sorry to hear of your predicament.
June 27, 2008 at 6:28 pm #84884
Thanks all – if they do repossess looks like we will still owe a fortune to the bank so this could go on for years – wish we has never bothered but we have no pension to speak of so thought it may be a good long term investment – how wrong we were – could have to go bankrupt then ! Just feel depressed at minute ..
June 30, 2008 at 9:05 am #84917
A friend of mine was repossessed in 1992 and six months ago had a letter from his original lender stating that he still owed 42,000 from that date.
He took advice from the CAB and offered the lender 3,000 pounds – they came back and said 4 and it was agreed.
June 30, 2008 at 11:46 am #84922
thanks aunty val we are trying to find a way to offload the property but the market is flat
December 10, 2008 at 11:32 pm #88513
Some great info on this thread.
I own two spanish properties both losing money (rent not even paying interest let alone capital) and both in negative equity.
I really want to get a solution to the problem which works for everyone (lenders, tenants and myself) and would welcome advice from anyone about any possible options.
December 11, 2008 at 6:42 am #88514
I came close to this with my UK home, and in the end sold the house below market value just to get rid of the issue. We were lucky, in that we had a lot of equity in the property, and dumped the house before the market fell too badly. I still felt conned though.
I think the same applies to sellers here, if you really are in trouble then dumping the property by selling below market value is the lesser of the evils. Of course you still have to find a buyer, and if you are already in negative equity this wont work either. But, if you can sell there are quite a few people here (in Spain) looking for bargains (myself included).
The only other option I can think of is get more income, but I know that is rarely that easy.
It’s really tough at the moment, but I think things are going to get worse before they get better, sorry. But, I wish you good luck, and hope things improve shortly for you, at least (last time I looked) the Euribor was in steep decline, if you can hang in there I think things will improve eventually.
December 11, 2008 at 9:39 pm #88537
I spoke to the spanish bank today and they seemed surprisingly relaxed about the situation. They asked me to put my position in writing but certainly made the suggestion that a comprise could be reached which would allow me to consolidate my position.
… fingers crossed!
December 12, 2008 at 4:47 am #88539
That’s good to hear. I am in talks with a distressed seller myself at the moment, and the impression I get is that the bank is taking it fairly easy at the moment.
I guess that, as there are so many people in a similar position. It is not in the banks best interest to flood the market with repo’s. If they can avoid it, it would make sense I guess.
December 12, 2008 at 11:14 am #88544
I had a property come on for last auction as the owners bank were not listening to him at all.
At the very last minute they agreed to drop some of the outstanding payments and convert the loan to interest only, so hang in there and you should be ok
December 28, 2008 at 6:02 pm #88907
I have a property in Spain which I bought with my wife. The property is now worth about £30’000 less than when I bought it about 2yrs ago. I still live in England (renting) and this apartment was meant for holidays and retirement.
I am now divorced and, due to the exchange situation, I am paying almost £900 per month for the Spanish Mortgage as well as £300 per month for the english bank loan to provide a deposit – all for a flat worth only £80’000 max. Things are getting pretty desperate!
I am considering permanently defaulting on payment and just cutting my losses. I have asked my Spanish lawyer what would happen. She merely states that the property would be repossessed and sold and that I would owe the bank a lot of money.
*** However *** She states that it is unlikely that I would be pursued for the money in England and that it would be written-off and all that would happen is that I would have a bad credit rating for loans in Spain from now on (and would probably be a fool to ever visit Spain again).
I must say I can live with that. However, does anyone know if this is correct? Can I simply walk away? I know I still have my english loan for the deposit to pay (which I can live with). Is there anyone else out there who has simply defaulted and stopped throwing good money after bad?
Any advice would be appreciated.
December 28, 2008 at 7:33 pm #88909
What you have been told sounds about right, but I do not have 1st hand experience of this.
You may want to try and give the property away though, get someone interested who is willing (and able) to take over the mortgage, and you should be home and dry. BTW, this is called subrogation.
December 31, 2008 at 11:09 am #88957
Thanks for that. Has anybody else got any advice or experience of defaulting?
December 31, 2008 at 12:02 pm #88960
Sorry to hear about your problem mehudspith. Will the bank pursue you in the UK? Depends upon the bank, and how much you owe them. They can if they want.
I’m going to setup a mortgage problem / repossession forum here for people like you to share information and support. I hope that helps.
January 3, 2009 at 1:36 am #88984
My first post on here so please forgive my blunt introduction –
She states that it is unlikely that I would be pursued for the money in England and that it would be written-off and all that would happen is that I would have a bad credit rating for loans in Spain from now on (and would probably be a fool to ever visit Spain again).
mehudspith, you really need to find another solicitor if thats the advice you were given. The spanish bank certainly WILL pursue you outside spain for your debt.
@El anciano wrote:
I came close to this with my UK home, and in the end sold the house below market value just to get rid of the issue
So you’re now coming from the other side of the fence then having had the ‘benefit’ of that experience?
@El anciano wrote:
What you have been told sounds about right, but I do not have 1st hand experience of this
El anciano – maybe you should be called ‘El Loco’. Please think before you start giving out half-cocked advice and if you don’t know than best to keep schtum. It doesn’t “sound about right”, it sounds 100% incorrect and
it’s irresponsible of you to advise anyone to the contrary.
Once again, please forgive my bluntness. Feel free to slate me but please don’t ignore what I’m saying!
January 3, 2009 at 8:28 am #88985
bite me! 🙂
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