Unique banking initiative in Spain

The Spanish economy has slipped into recession and now has the highest unemployment rate in the European Union and its government today unveiled what is the first programme of its kind to allow out-of-work homeowners to defer mortgage payments. Under the mortgage-relief programme, unemployed homeowners and some retirees could postpone payment of half their monthly bill for two years starting in January — as long as the amount deferred each month was no more than €500. The offer would apply to mortgages of up to €170,000 and could affect about half a million people. It was not clear whether thousands of foreigners who own homes in Spain would also qualify. The Spanish government will underwrite the deferred payments, which may be spread over ten years. No details were given as to the ultimate cost to banks, or whether the government would help cover that. More details will be released this Friday.