By Amie Keeley
THE Spanish government has slammed a court ruling which prevents banks from chasing bankrupt homeowners for more money.
Finance secretary Elena Salgado criticised the Navarra judge who ruled that giving a mortgaged house back to a bank is sufficient to cancel a mortgage debt.
And this is the case even if it has suffered negative equity.
Now international rating agencies such as Moody’s have warned that the ruling could endanger the Spanish banking system.
The Navarra court ruled that a family had to be forgiven nearly 30,000 euros of negative equity on the home they had mortgaged through BBVA bank.
It came about when the bank repossessed their home valued at 71,000 euros. But after the flat failed to sell at auction it was reduced and sold for 43,000 euros and the bank sought the remainder.
Eventually the court decided that as it was the bank that had initially valued the house at 71,000 euros when it gave the loan, the homeowner could not be expected to pay the difference.
While the ruling has been welcomed by consumer groups, agency Moody’s have warned it could deter important investors in Spanish mortgage debt.
The case has similarities to a British family, who face losing their UK home after they defaulted on the mortgage for a holiday home in Estepona.
The Olive Press revealed in December that the Chattertons face losing their 320,000 euro home in Wiltshire after Banco Sabadell got a European Enforcement Order (EEO).
The new court ruling is expected to help the couple, both paramedics from Chippenham.
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