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The Effects of the 2012 Spanish Law Reform to Protect Mortgage Debtors

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  • Rafael González-Val

Abstract

We examine the effects of the legal reform passed in 2012 in Spain to protect mortgage debtors. Under the new regime, it is difficult for low-income debtors who meet certain requirements to be evicted. In the case of default, the bank is forced to offer the debtor a restructuring of the debt, or the debtor can even, as a last resort, transfer the property to the bank as an alternative to having the lender foreclose on it, thus being allowed to stay in the property as a tenant and paying a reduced rent, and avoiding eviction even after foreclosure. We consider quarterly data from 50 Spanish provinces (NUTS III regions) from 2001 to 2019(Q3). We use panel data models with regional, year, and quarter fixed effects, linear and quadratic region-specific time trends, and other relevant control variables at the regional level (house prices, inflation, and unemployment rates), and our results reveal that the reform significantly reduced the number of foreclosures, but that this effect was transitory, fading 6 years after the reform. However, the negative effect on the mortgage loans market was permanent throughout the period under consideration.

Suggested Citation

  • Rafael González-Val, 2021. "The Effects of the 2012 Spanish Law Reform to Protect Mortgage Debtors," Housing Policy Debate, Taylor & Francis Journals, vol. 31(2), pages 239-253, March.
    • Handle: RePEc:taf:houspd:v:31:y:2021:i:2:p:239-253
    DOI: 10.1080/10511482.2020.1805488
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    Cited by:

    1. Rafael González-Val, 2022. "House Prices and Marriage in Spain," Sustainability, MDPI, vol. 14(5), pages 1-16, March.
    2. Rafael González-Val & Miriam Marcén, 2024. "Population growth and taxes: the effect of regional differences in the Spanish inheritance tax," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 73(1), pages 135-163, June.
    3. Rafael González-Val, 2023. "Did the 2012 Spanish law reform to protect mortgage debtors modify banks’ lending behavior?," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    4. Rafael González-Val, 2022. "A Time Series Analysis of Judicial Foreclosures in Spain," JRFM, MDPI, vol. 15(10), pages 1-22, October.

    More about this item

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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