Wednesday, October 10 09:16:02
There are few constraints on Spanish banks when it comes to taking possession of homes in default and repossessions are growing in Spain and affecting the middle classes to a much greater extent in recent months. Spanish business people, upper middle class families and their loan guarantors, typically parents of first-time buyers, now account for 60 percent of foreclosures in Madrid, according to AFES, an association that advises homeowners facing repossession. Three years ago, 80 percent of foreclosures were on the homes of immigrants, usually the first to lose jobs and fall behind on loan payments in a souring economy. They now comprise 40 percent of the total, according to AFES.
"Repossessions are encroaching further into the city centers, like an overflowing river," said Emilio Miravet, head of real estate finance at the Spanish property unit of advisory and investment firm Catella AB. "At the beginning of the crisis, it was homes in the periphery areas belonging to the less affluent that were being foreclosed upon."
Loan guarantors, often parents who used their houses as collateral to help their children become homeowners when real estate was booming, now represent a fifth of foreclosures, AFES data show. Bloated prices had forced thousands of first-time homebuyers to seek parental help to get a foot on the property ladder, according to Jose Luis Ruiz Bartolome, author of "Adios Ladrillo Adios," which means "Goodbye, Real Estate, Goodbye," a 2010 book on the rise and fall of Spain's property market.