Spain freezes foreclosures for two years

Spain's government Thursday approved the creation of a stock of homes for rent to evicted mortgage debtors and also instituted a two-year freeze on foreclosures.

Economy Minister Luis de Guindos said in a press conference that the homes in the so-called "social housing fund" will consist of properties that banks acquired through repossessions.

Deputy Prime Minister Soraya Saenz de Santamaria, on her part, said the rents will be affordable and that the government will unveil more home foreclosure relief measures in the future.

The measures approved Thursday by Prime Minister Mariano Rajoy's administration are an "urgent and mitigating response" to Spain's difficult economic situation, Saenz de Santamaria said.

They also come after two Spaniards committed suicide in recent weeks when they were about to be evicted from their homes.

Single-parent families and households with children under three, as well as those whose members have serious disabilities or are in a situation of dependence or illness that prevents them from working, will be among those covered by the foreclosure freeze.

Other potential beneficiaries include jobless debtors whose unemployment benefits have expired.

The protection applies to families with household income of less than 1,600 euros ($2,041) a month.

Organizations of people affected by foreclosures slammed the conditions approved by the government and called for the measure to be applied in all cases in which homeowners cannot make mortgage payments on their primary residence due to an unexpected bankruptcy.

The government and the main opposition Socialists have been in talks aimed at reaching a consensus on overhauling Spain's mortgage law.

In Spain, as in some other European countries, people who lose their homes to foreclosure remain on the hook for the unpaid balance of the mortgage.

Since 2007, some 400,000 families in Spain have lost their homes to foreclosure.
In many cases, homeowners purchased properties at inflated prices during a long-building housing bubble after they were approved for a substantial mortgage loan with highly favourable conditions.

The collapse of the real-estate bubble left many Spanish banks saddled with toxic assets and sent the country's economy into a severe tailspin.

Spain is mired in recession for the second time in four years and the unemployment rate stands at a record 25.02 percent.