The Economist has an interesting article on the Spanish housing market from earlier this month (Builder’s Nightmare). As has been well recognized, Spain is experiencing housing issues that at least rival, if not surpass, those in the United States. Exactly how bad is difficult to determine because the Spanish market is not as transparent as the US market.
What I found interesting was this snippet about how the mortgage market is structured in Spain.
Spanish mortgages cannot be cancelled by dropping the house keys at the bank: security is provided by all of a borrower’s assets—and sometimes those of relatives as well. It is no surprise that most Spaniards do their utmost not to default.
Contrast this with the previous post about politicians working to secure mortgage cram-downs for buyers having difficulty making payments.
Hat tip for the original article to Barcepundit.