Madrid.—Spain's Parliament has rejected a proposal to ease a law on mortgage foreclosures in favour of as many as 300'000 homeowners who have lost their properties.

The Galician National Block, or the BNG as the party is known in Spain, had asked legislators to amend the law to allow mortgage holders to walk away from their debt by handing over the keys to their properties, to permit homeowners to delay mortgage payments beyond stipulated deadlines and to consent to partial debt write-offs. Lawmakers rejected the proposals, Parliament said on its website yesterday.

Under Spanish law, if a foreclosed property is sold for less than the outstanding mortgage on the asset, the bank can claim the difference from the borrower. Lenders can make a claim against all of a borrower's present and future assets and earnings. The number of foreclosed properties in Spain has climbed tenfold in the past three years as unemployment reached 21 percent, the highest in the European Union, says Idealista.com, Spain's largest property website. Idealista advertises more than 30'000 foreclosed homes worth 4.6 billion euros on behalf of 40 Spanish banks and savings banks. That's up from just 3'000 in June 2009, according to the company's website. “We are talking about a social problem of the highest order,” Francisco Xesus Jorquera, a BNG lawmaker, said.

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