“Very serious threat … to Spain’s entire mortgage market”: Moody’s
The European Commission, for once seemingly on the side of the common man, has launched a formal legal procedure against Spain for failing to protect consumers against the abusive clauses that proliferate in Spanish mortgage contracts. It also demands that Spanish law finally gets in line with European directives on mortgage contracts and payment orders, which date back to the year 1993.
During the immediate aftermath of the multi-billion-euro bailout of Spanish banks, in 2012, the Commission published a number of scathing reports on Spain’s dysfunctional foreclosure laws. The problem, as the same reports pointed out, was that changing the laws would risk doing untold damage to the already deeply compromised balance sheets of the banks. The Commission decided to err on the side of caution
Now, four years and over 600,000 evictions later, the balance sheets of Spain’s banks are apparently fortified enough to withstand an overhaul of Spain’s foreclosure laws. At least that’s what the Commission seems to believe. Judging by the disappointing quarterly results announced this week by most of Spain’s biggest banks, senior management may beg to differ…
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