''Escrache'' it's direct action.
April 14, 2013 10:13 AM   Subscribe

Mortgage fraud, faux-democracy and escrache in Spain. Those unfortunate enough to lose their homes are also burdened with a debt for life.
Anatomy of an ‘escrache’.
Spanish banks repossessed 30,000 family homes in 2012 and those who take part in doorstep protests may face fines of up to 6,000 euros in Madrid.
Between 2002 and 2008 an average of 754,000 new homes were built in Spain every year. It is currently estimated that up to 6 million homes remain vacant.
posted by adamvasco (17 comments total) 17 users marked this as a favorite
Thank you for this. I took a housing finance class last summer and basically never recovered from the realization that building houses has so very very very little to do with actually housing people. The class was taught by Roberto Quercia, an alumnus of my program and a bonafide expert on the U.S. mortgage crisis. It was a red pill/blue pill universe-reorganizer and to see the Spanish version is just %$#&!
posted by spamandkimchi at 10:28 AM on April 14, 2013 [3 favorites]

Hey Spamandkimchi, did the class talk about the influence of Fannie Mae and Freddie Mac?

My own interpretation of the housing crises casts those sorts of institutions as market distorting subsidies for top-heavy financial excess that is simultaneously environmentally unsound and acts as bread and circuses, but I've never heard a qualified economist talking about them.
posted by tychotesla at 11:24 AM on April 14, 2013 [1 favorite]

You should probably read more about Fannie and Freddie and housing crisis. They actually lost market share during the bubble and most reasonable analysis of their actions during the bubble do not place blame on them.

What Fannie and Freddie do at their core is allow Americans to have 30 year fixed rate mortgages. That part of their business was completely innocent. They also had a business where they bought third party mortgages - sub-prime mostly - that contributed to the crisis, but those loans were originated and underwritten by the private sector, and the GSEs have successful sued those parties for lying to them. Actually one of the more recent critiques is that they are not being aggressive enough in pursuing more punitive settlements.

And yes Spain was way more of a disaster than the US, and the strict recourse nature of the loans combined with savings banks who issued those loans being in the hands of parties with direct interest in perpetuating the construction bubble means it is just uglier all around.

The Spanish government is trying to extend and pretend on a grand scale, while also bailing out the Caja that fail due to bad loans to their cronies.
posted by JPD at 11:48 AM on April 14, 2013 [12 favorites]

Some weeks ago I heard news on (Dutch) radio that a Europeran court had ruled the system of losing your house AND still keeping your debt was unfair

See this article for example:

Spanish law must better protect borrowers who claim the terms of their mortgage are unfair, the Luxembourg-based European Court of Justice said yesterday. The ruling was triggered after a Spanish court examining an eviction case sought guidance on whether local law met the bloc’s requirements on unfair terms in consumer contracts.

Spain will cap interest charges for late payments and prohibit the start of foreclosure proceedings before three mortgage payments have been missed, Saenz said.

The government will also seek to resolve foreclosure cases involving unlawful mortgage contracts and prevent the inclusion of illegal provisions in lending agreements, she said, without giving more details.

The fact that homeowners in foreclosure must repay mortgages even after ceding properties to lenders doesn’t break any laws, Saenz said. While some agreements enable homeowners to walk away from their debt in the event of foreclosure, such deals are scarce because they’re only available for lower borrowing amounts and carry higher interest rates, she said.

posted by IAr at 12:05 PM on April 14, 2013 [1 favorite]

See "deficiency judgement" after foreclosure or short-sale of a house here in the United States, and the tax consequences with the IRS of "forgiven debt". See also simultaneous pursuit ("dual tracking") of short-sale and foreclosure by banks.

Thus far escrache seems to have been peaceful, except for the almost inevitable violence associated with police action. It's ripe for agents provocateur. The end-game will arrive when houses start burning.

"Libertarian Communism" (from the website libcom.org): I guess anarchism has too much bad press and media around it to be associated with such an upright and respectable term as communism.
posted by the Real Dan at 12:27 PM on April 14, 2013

"Libertarian communism" is a word for anarchism from back before people were stupid enough to think that anarchism and capitalism were compatible concepts.
posted by Pope Guilty at 12:49 PM on April 14, 2013 [4 favorites]

The blogger Cunning Hired Knaves has translated some recent pieces about escrache.
posted by adamvasco at 1:53 PM on April 14, 2013

This is excellent. Thanks for posting.

The PAH - the Platform of Mortgage Victims - is, from what I can tell, doing phenomenal organizing work and that should serve as a model for all of us involved in similar fights across the globe.
posted by willie11 at 5:16 PM on April 14, 2013

Meanwhile - not in Spain:

At the meeting yesterday, Federal Reserve staff argued that the documents relating to widespread legal violations are the “trade secrets” of mortgage servicing companies. In addition, staff from the Office of the Comptroller of the Currency (OCC) argued that these documents should be withheld from Members of Congress because producing them could be interpreted as a waiver of their authority to prevent disclosure to the public of confidential supervisory bank examination information.

Think about that: At the meeting yesterday, Federal Reserve staff argued that the documents relating to widespread legal violations are the “trade secrets” of mortgage servicing companies.

(in another thread somone claimed the Federal Reserve WAS the Government. If that is a true statement - legal violations are being argued by "the Government" as "trade secrets")
posted by rough ashlar at 5:25 PM on April 14, 2013 [4 favorites]

Not quite, if you parse lt closely enough. "Trade secrets" can amount to pretty mundane but still commercially sensitive information, the term sounds much sexier than what the reality is (at least, in terms of what qualifies for protection during the discovery phase of a lawsuit). Some kinds of bank documents tend to benefit from an assumption of commercial sensitivity; and in theory that information could be interspersed with whatever the particular information pertaining to the "legal violations" is. So, yes, it looks and smells bad, but it doesn't add up that plainly to an admission of wrongdoing. Just that some potentially relevant information is contained in documents that are probably, by normal standards, commercially sensitive. And then the OCC gets its undies in a knot because Congress is edging onto their turf, creating another sideshow of a bureaucratic pissing match. This whole thing continues to be a miserable swamp, as one might expect.
posted by snuffleupagus at 5:51 PM on April 14, 2013

Also, anti-deficiency protections vary state by state in the US, as does the legality of waiving those protections, and the applicable loopholes.
posted by snuffleupagus at 6:01 PM on April 14, 2013

I propose we make every German a Spanish, Italian or Greek timeshare condo from the surplus housing stock in exchange for the debt. Problem solved.
posted by humanfont at 6:14 PM on April 14, 2013 [1 favorite]

Very nice post, thanks! Interestingly, I needed to whitelist libcom.org in AdBlock+, but all domains remained blocked for them, very strange.
posted by jeffburdges at 1:14 AM on April 15, 2013

This description of the documentary FUTURES MARKET is a little too poetic, but the film is on Spain and real estate speculation.
...the recent flurry of credit-fueled property development has depleted not only national treasuries, but the distinctive characters of these nation's cities -- and therefore, their cultural memory as well.
posted by spamandkimchi at 1:46 AM on April 15, 2013

tychotesla, here are some slightly incoherent notes. Let me know if you need clarification.

Historical Overview
1930s - Great depression led creation of modern financial system
FDIC Federal Deposit Insurance Corporation - provide insurance to depositers
FHA Federal Housing Authority - to provide mortgage insurance to lenders
Primary market - lender to home buyer
Secondary market to pool risks (Fannie Mae etc) ; lender can sell the mortgage to secondary market, so the lender has more money to make loans
Suburbia was built on this system, lasted until 2007
The secondary market was national until the late 1970s. Early 1980s became international, when mortgages were pooled and turned into mortgage backed securities that could be sold to investors.

Listen to This American Life's "Giant Pool of Money" episode for a vivid rendering of the 2000s.

On the proposed re-org of Fannie & Freddie: [I haven't followed this since last summer, so folks in the know should update!]
Three options
1) fully private secondary market (taxpayer off the hook, liquidity to whom? and when? so swings would have higher peaks & lower troughs, pooling of risk, but might take undue risk)
2) fully public secondary market (intervene easier, stable,, countercyclical liquidity, innovation/testing, but taxpayer money, politicized)
3) somewhere in between / mixed model (explicit guarantee to a loan if it meets certain guidelines)
Most of the key financial industry players support a mixed model and think that without government involvement it will be a wild wild west.

A mid-1990s study on impact of privatizing Fannie & Freddie, Quercia involved, projected a 10% decline in homeownership for minorities and low-income families, so Clinton didn't move forward with privatization.
posted by spamandkimchi at 2:13 AM on April 15, 2013

spam(andkimchi), sorry spamandkimchi, whilest regurgitating what you learnt in your American housing class, have you anything to say about wnat is happening in Spain.We don't have either Fannie May or the other one in Europe.
What about the right to protest directly to the lawmakers anything about that? You do know that there are places outside America, right?
( Hello mods, delete if you want. I am just sooooooooooo tired of everything being about America, even when it's not ).
posted by adamvasco at 9:06 AM on April 15, 2013 [3 favorites]

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