Immigrants in Spain struggle to keep homes
For many immigrants, the Spanish dream is turning into a nightmare as they face layoff risks and increasing higher mortgage payments.MADRID – When Jorge Alexander Rodriguez bought his apartment in southern Madrid with his wife two years ago, he fulfilled the dream of a better life that led him to move to Spain from Colombia.
But with his wife now unemployed, the dream has turned into a nightmare with the couple on the verge of losing the apartment they share with their two children as they can no longer meet their monthly mortgage payments.
"I know that sooner or later I will lose my apartment," the 36-year-old construction worker told AFP.
As is the case with more than 90 percent of people who secure a home loan in Spain, their mortgage has a variable interest rate linked to Euribor, the interbank rate for three-month loans in euros, which has risen in recent years.
"It is impossible to continue to pay," said Rodriguez, whose own job is also at risk because of Spain's sharp economic contraction.
The financial problems faced by the Rodriguezes are commonplace in Spain, where banks turned a blind eye to the credit worthiness of potential clients during the economic boom years that came to an abrupt end in 2008.
Jhon Hernandez, the head of America-Spain Solidarity and Cooperation (AESCO), a group which helps immigrants in financial difficulties, said banks allowed people with a poor credit record to act as guarantors for mortgage loans for each other.
The association has so far helped 12,000 who are struggling to repay their loans and it expects 60,000 people could be forced out of their homes by May because they can no longer meet their mortgage payments.
"They come to us totally lost, they don't know what to say to their bank, how to face legal proceedings," said Hernandez, who is also from Colombia.
When he applied for a mortgage, Rodriguez said his bank told him he needed to list a guarantor because the couple's combined income was not sufficient. He provided the name of a friend who does not own any property.
"Now all the bank says it can do is extend the length of the mortgage by five years to 40 years, which would lower the monthly payment by EUR 100," he said.
For immigrant homeowners, the problem is compounded by the fact that they tend to work in areas such as construction and other sectors that have been especially hard-hit by the sharp rise in unemployment over the past year in Spain.
The number of unemployed people in Spain rose in January by nearly 200,000, its 10th straight monthly increase to more than 3.3 million people, the highest level since the current jobless registration system was set up in 1996.
Guillermo Portilla, an immigrant from Ecuador, stopped meeting payments on a 30-year mortgage he took out on a 160,000-euro apartment after he became unemployed two months ago.
When he offered the flat to the bank in exchange for cancelling his debt, the bank said they were not interested.
"The bank told me that I had to find a job," the 38-year-old said.
"I recommend that people be more prudent, save more, go out less on the weekends," he added.
The number of immigrants in Spain shot up from 500,000 people in 1996 to 5.2 million currently, mainly from Latin America, eastern Europe and north Africa, out of a total population of 46 million.
23 February 2009
Virginie Grognou / AFP / Expatica