INE: Primary Residence Mortgage Foreclosures Fall By 12.4%

4 December 2015 – ABC

During Q3 2015, 5,959 primary residence mortgages were foreclosed, which represents a decrease of 12.4% compared with the same period in 2014, according to the mortgage foreclosure statistics published on Thursday by the National Institute of Statistics (INE). In inter-quarterly terms (the third quarter compared with the second quarter), mortgage foreclosures involving primary residences decreased by 31.3%.

The primary objective of this statistic is to provide information about the number of mortgage foreclosures initiated and registered in the Property Registers during the quarter in question. INE points out that not all mortgage foreclosure procedures that are launched end with the eviction of tenants. During the third quarter, 19,403 mortgage foreclosures were launched, 17.8% fewer than during the same period in 2014 and 32.9% fewer than during the second quarter. Of those, 18,344 related to urban properties (including homes) and 1,058 related to rural properties.

The number of mortgage foreclosures over urban properties decreased by 18.5% with respect to Q3 2014 and by 33.2% with respect to the previous quarter. Of the urban properties, 11,584 foreclosures related to homes, i.e. 59.7% of the total, and this figure represented a decrease of 15.6% compared to the same period in 2014. In terms of homes, mortgage foreclosures over homes owned by individuals amounted to 7,590 during the third quarter (down by -13.8% YoY), of which 5,959 were the primary residences of those individuals, whilst 1,631 were not the owners’ primary residences. The number in the latter category decreased by 18.4% with respect to the third quarter 2014.

Meanwhile, there were 3,995 mortgage foreclosures over homes owned by legal entities during the third quarter, a decrease of 18.9% with respect to the same period last year. According to INE, mortgage foreclosure procedures were initiated for just 0.03% of the total stock of family homes in Spain (18,378,100) between July and September 2015.

Decreasing trend for new builds and second-hand housing

Of the total number of mortgage foreclosures recorded involving homes during the third quarter, 9,971 related to second-hand homes, which represented a YoY decrease of 13.3%. Foreclosures over new homes amounted to 1,613, i.e. 27.8% fewer than during the same quarter in 2014. The statistics also reveal that, during the third quarter, 20.3% of the home mortgage foreclosures launched related to mortgages constituted in 2007; 17.2% related to mortgages granted in 2006; and 11.3% corresponded to mortgages signed in 2008. Put another way, 59.8% of the mortgage foreclosures initiated during the third quarter related to mortgages constituted between 2005 and 2008.

Between July and September, mortgage foreclosures over land amounted to 615, representing a YoY decrease of 55.9% and a QoQ decline of 49.5%. Meanwhile, mortgage foreclosures relating to commercial premises, garages, offices, storerooms, warehouses and other urban buildings amounted to 6,145, i.e. 16.8% fewer than during the third quarter last year and 31.9% fewer than during the previous quarter. Finally, there were 1,059 mortgage foreclosures involving rural properties during the third quarter, which represented a YoY decrease of 3.7% and a QoQ drop of 27.2%.

Andalucía leads the ranking

By autonomous region, Andalucía led the number of foreclosures involving homes during the third quarter, with 2,984 in total, followed by Valencia (2,339) and Cataluña (2,022). At the opposite end of the spectrum were Navarra and País Vasco, with just 63 foreclosures each. In terms of the number of foreclosed properties, Andalucía also led the ranking, with 5,019, followed by Valencia (3,718) and Cataluña (3,207). At the tail end were Navarra (99) and La Rioja and Cantabria (112).

Original story: ABC

Translation: Carmel Drake

INE: Home Foreclosures Drop By 6.5% To 17,800 In Q1 2015

8 June 2015 – Cinco Días

During Q1 2015, 30,952 mortgage foreclosures (i.e. procedures to force the sale of properties resulting from unpaid mortgages) were recorded in Spain’s property registries. Of those 30,952 procedures, 17,780 related to homes, i.e. 6.5% fewer than during the first quarter 2014. The foreclosure of individuals’ primary residences amounted to 8,802, i.e. 6.9% fewer, according to data from INE.

The statistics institute highlights that not all mortgage foreclosures are the result of the legal removal (eviction) of owners from properties, and that in some cases, a single property is subject to several foreclosure procedures. The Bank of Spain has other statistics relating to evictions.

In general, non-payment results in foreclosure after a period of between six and 12 months, therefore the foreclosures completed during Q1 2015 related to mortgages that stopped being paid during the first half of 2014. Moreover, in addition to the 17,780 home foreclosures, INE recorded 10,316 other (foreclosure) processes involving premises, garages and offices and 1,361 relating to rural properties.

Most of the mortgages that result in the seizure of homes were signed during the last few years of the real estate bubble: 21.1% were signed in 2007, 15.2% in 2006 and 11.8% in 2008. Mortgages signed in those three years account for 48.1% of all foreclosures, although we should take into account that at that time, more than 100,000 mortgages were being granted per month, compared with current volumes of 20,000 per month. In relative terms, the worst year is still 2007, with 0.3% of the mortgages that were signed that year being foreclosed during Q1 2015, followed by 2008, 2009, 2013 and 2012 (between 0.21% and 0.25%).

By region, the effect of the real estate bubble is also leaving is mark: the highest rates of home foreclosures form a rainbow in the shape of the Mediterranean Coast. Andalucía leads the ranking (with 0.29% of the mortgages foreclosed last quarter), followed by Murcia (0.25%), Valencia (0.25%), Cataluña (0.23%). In the País Vasco, the rate is 0.02%.

Original story: Cinco Días

Translation: Carmel Drake

Cataluña: Banks Have 3 Months To Confirm Stock Of Vacant Homes

25 March 2015 – El País

Financial institutions, investment funds and the bad bank – Sareb – will have three months to inform the Generalitat about the number of empty homes they have on their books as a result of foreclosures or the assignment of deeds in lieu of payment (“daciones en pago”). Using this information, the Catalan Government will be able to impose a tax on vacant homes (the corresponding bill is currently with the Parliament) and undertake the necessary actions to establish their condition and demand their refurbishment. The decree that creates the register, approved yesterday by the Consell Executiu, also includes a pre-emptive purchase option by the Public Administrations of the homes whose residents are at risk of being evicted.

The Ministry for Housing, led by Carles Sala, wants to increase its stock of social homes in areas with highest demand. The urgent measure decree law to mobilise homes resulting from mortgage foreclosures establishes that the Public Administrations may exercise “their pre-emptive rights and rights of first refusal” – i.e. to a preferential purchase – when a company, financial institution, investment fund or Sareb is going to sell a home for which a mortgage foreclosure procedure is pending in any one of the 72 municipalities with greatest demand for housing. The text will come into force when the Official Document from the Generalitat of Cataluña (Documento Oficial de la Generalitat de Cataluña or DOGC) is published, which is expected to happen this week.

Sources from the Catalan Executive explain that they estimate that the banks have between 10,000 and 20,000 vacant homes on their books in areas with highest demand. This figure, which currently ranges quite a lot, should be confirmed by the register, which all owners of empty homes in Catalaña will have to sign up to. The occupants of the homes that will be handed over to the Public Administrations – which may in turn assign them to entities in the third sector (of social economy), per the request of those entities – will have to pay a social rent amounting to €212 per month on average.

The Department for Planning and Housing, led by Santi Vila (pictured above), is already exploring the market and may announce its first transactions next week. For the time being, the Catalan Housing Agency has €8 million to make purchases, although its final budget will depend on the amount collected through the tax that it will apply to the banks’ empty homes, which may range between €8 million and €26 million. Sources from the department explain that they are not looking to purchase homes for €100,000. The majority of the homes that have eviction orders pending are located in suburban neighbourhoods, and as such they are modest flats whose market prices may be as low as €20,000 or €40,000.

The Generalitat has also found that many of the homes in the stock that have been vacated due to evictions are falling into disrepair. For this reason, the decree obliges the entities that own such properties to carry out the necessary renovation work. If they do not, there are two options. The first involves a serious fine. The Housing Law establishes fines of up to €90,000, although the Catalan Government is in favour of ensuring that the amount of these fines is commensurate with the cost of the works that need to be performed. If the financial entity that owns the home does not carry out the renovation work, the Generalitat may conduct an “enforcement”, involving the expropriation of the use of the home for a period of between four and 10 years.

In the end, the department will try to avoid any double evictions through an aid package that will be collected in April. In this case, the objective is to prevent families that have lost their homes, but that have benefitted from the assignment of deeds in lieu of payment or social (discounted) rent by the financial entity, from having to face additional procedures if they cannot afford the rent.

Original story: El País (by Lluís Pellicer)

Translation: Carmel Drake