How Foreclosures Work

The mortgage bubble brought behind it a large number of mortgage foreclosure procedures were carried out, bringing behind it the birth of the 15-M movement or the Anti-Disposal Platform that promoted the growth of figures who ascended to politics, such as Pablo Iglesias or Ada Colau. What was really important was the feeling that having or not having a place to stay after the eviction did not matter at all, the only thing that mattered was that the banks (which had created this situation) seized the homes.

This situation brought new business avenues for banks and other companies through judicial embargoes. But not only houses were seized, as many stocks were also seized that caused the prices of some products to drop in wholesale sales. A company that was aware of this situation was Liquistocks, specialized in the sale of liquidations and wholesale stocks, offering batches of new high-quality products at the best price. To this day, we can still find part of those stocks on their website.

In any case, foreclosure is a fairly complex judicial procedure due to the nature of the mortgage contract. In this type of contract, the mortgaged person is not only liable for the debt he contracts with the home he buys but also liable for all his equity and that of the guarantors. This gave situations in which the executed person did not have money to pay the debt, and in addition to having his assets seized, that of his relatives was seized. Although there were situations in which solutions such as dation in payment and social rents were proposed, we still find news in which social groups prevent the police from launching the house, setting up pickets and barricades.

In any case, the objective of this article is to clarify the different steps that a judicial process has to go through in order for a foreclosed home to be declared. These procedures are quite long, and if done without following the legally established procedure, we can find null and void that takes the procedure back to the last act legally executed.

The steps that must be taken to seize a mortgaged asset

The first step that the bank takes when detecting a default on the mortgage is to make a notice of default. The bank is interested in the reason for the non-payment, in addition to complying with the obligation of prior notice prior to the claim so that the default interest begins to run. Here the bank can propose different solutions, such as dation in payment, but it is most likely that if it sees a situation of credit default, it will start the procedure, which usually happens between the first and third month of default. The indirect consequence of non-payment is the entry into default, which blurs the registration in the lists of defaulters such as the ASNEF, from which it is really difficult to get out.

The second step is to file the foreclosure claim with the First Instance Court of the home address. This is the ideal time to have an adequate legal defense, since the procedure can be delayed quite easily if you have a good lawyer. Free Legal Assistance lawyers are an option for those who do not have resources.

In the course of the procedure, the Property Registry is asked to formalize the charges of the property, and the Lawyer of the Administration of Justice is asked to establish the value of the property. Here we will know if our heritage is free from any embargo, or if otherwise we respond with it.

The announcement of the auction takes place between the sixth month and the first year of non-payment, but it can be delayed. This is published in various official gazettes and on court boards, and here the important thing is that it be sold for a higher price than was paid so that the executed person does not suffer any financial damage, although this does not usually happen. At the time of the celebration, the bank can keep the property for 60% of its value, and it is at this time that the debtor loses his property and the launch of the home is decreed.

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