Madrid, Spain – 28/05/2015 – as published by The Wall Street Journal, co-written with Matt Moffett.

Government Relief Programs Are Inadequate to Scope of the Problem, Critics Say

MADRID— Xacobo Rodriguez, out of work and with an infant child, says he lives in a constant state of dread. “You always fear the day there will be a knock on the door and then you’ll be evicted from your home,” he says.

Mr. Rodriguez, 38 years old, is one of the many Spaniards who can’t pay pricey mortgages taken out before a property bubble popped in 2008. Worse, his mother, who guaranteed his loan with her own home, is also at risk. “I feel we both might sink,” he says.

Six years after the collapse of the real-estate market wrecked Spain’s economy, no end is yet in sight to a housing crisis that has triggered tens of thousands of foreclosures and left many homeowners living with the threat of losing their properties.

Last week the Bank of Spain reported that banks had repossessed 38,961 primary residences in 2013, a minimal decline of less than 1% from 2012. When second residences are included, the total number of houses seized last year increased by 11%.

A spokeswoman for the Spanish Bank Association said changes in how the central bank compiles mortgage statistics may have made the situation in 2013 look worse than it was.

Still, the statistics have sparked renewed debate about the efficacy of government measures to assist mortgage debtors. Amid growing protests and some high-profile suicides of indebted homeowners in 2012, the government decreed a two-year moratorium on eviction of families that meet hardship criteria, such as having a disabled member, expired unemployment benefits or very young children.

A law passed last year fleshed out some of the measures in the decrees, including the creation of a Social Housing Fund with 6,000 units for debtors needing a place to live.

Those policies have been inadequate given the dimension of the problem, said Irene Montero, a leader of the Platform for Mortgage Victims, an advocacy group that stages flash protests to try to block evictions. “People aren’t being helped and they need help,” she said.

A Finance Ministry spokeswoman said the government’s steps to curb evictions haven’t been in force long enough for their full effect to be felt. She noted that forcible evictions declined in 2013 and that more than 90% of houses taken back by the banks were unoccupiedat the time.

The Bank Association spokeswoman said banks have done all they can to ease the strain on debtors, especially considering the scale of a national economic catastrophe that has left nearly six million people out of work.

She noted that the number of residences seized last year represents less than 1% of the nearly six million home mortgage loans outstanding. Moreover, about a third of those who did lose their primary residences did so as part of an agreement to have their debts erased. “It’s just not fair to fail to recognize the effort the banks are making to settle the crisis,” she said.

In some ways, the government is treading a fine line between trying to lend a hand to mortgage holders and nursing its banking system back to health, said Robert Tornabell,an economist at Esade Business School in Barcelona.

With the banking system on the verge of collapse in 2012, the government took a €41 billion ($56 billion) bailout from the European Union. In return, EU officials imposed stringent capital conditions on banks.

“The best short-term solution is more social housing,” Mr. Tornabell said.

But a government program to make 6,000 low-cost rental units available hasn’t functioned well, Mr. Tornabell and other analysts say. Only 750 of the apartments have been occupied, and the Mortgage Platform says the eligibility standards applied by banks, which are administering the program, are too severe.

The Bank Association spokeswoman said the criteria have been changed recently and banks hope more people will avail themselves of the program.

Debtors such as Sara Hichau, 33, a house cleaner and waitress, still worry. She bought a house with her boyfriend, but they are now estranged and she has been left with a €100,000 mortgage debt.

“He left the relationship and forgot that he had bought a house with me,” she said in tears. “I can’t do anything to pay it off. I can’t plan for the future.”

In a report on Spain’s housing crisis Wednesday, Human Rights Watch said only 2% of Spain’s total housing stock is devoted to social housing, compared with 35% in the Netherlands, 21% in the U.K. and 17% in France.

It said the government should broaden the criteria for the moratorium on evictions to include all families with children under 18 and to extend the moratorium beyond two years for those already benefiting from it.

It also urged that insolvency laws be revised to allow debtors to more easily discharge personal debt, and that banks be prodded to engage in mediation with mortgage debtors.

Raquel de Cadiz Escudero, a mother of five, and 20 other members of the Platform for Mortgage Victims held a protest in front of her bank on Tuesday.

The mother of five said she was due to be evicted this week from a property she has rented after the landlord defaulted on the mortgage and disappeared.

“We are completely destroyed,” she said. The protest, she said, might not be enough to stop someone from knocking on her door any day with an eviction notice.