Moody's says home defaults in Spain raise bank losses
Spain's banks have launched a record number of home mortgage foreclosures as the economic crisis bites, worsening their losses, Moody's rating agency warned on Wednesday.
The number of Spanish foreclosed mortgages taken to court rose 126 percent in 2008 from the previous year and 59 percent in 2009, the New York-based agency said.
In the first quarter of 2010, 27,561 foreclosed mortgages were reported, a record since the economy began to turn sour in 2007, Moody's Investors Service said in a report.
The weak economy, poor housing market and high unemployment rate forced banks to initiate many foreclosures, it said, raising the severity of losses and squeezing liquidity.
The jobless rate in Spain is more than 20 percent, the highest in the euro zone, and latest figures showed 4.017 million jobless in the second quarter of this year.
"Moody's believes that the very high reported number of foreclosed mortgages that have been taken to court in Spain since 2007 underestimates the actual number of properties that have been repossessed by Spanish financial entities," said the report's author, Moody's vice president Alberto Barbachano.
Each foreclosure could involve several homes, Barbachano said. And Spanish mortgage lenders were now more willing to make voluntary agreements, accepting the property as payment in kind for the debt.
© 2010 AFP