Apropos the discussion that evolved from the postscript in the last post, it just so happened that current affairs programme Kastljós did a segment this evening on home foreclosures and auctions after the meltdown.
Some stats: In 2007 there were 175 auctions of homes [UPDATE: and retail properties] that had gone into foreclosure. In 2008, the year of the meltdown, they were 259. In 2009 they were 373, and by 1 September this year there had been 425 auctions. If that same trend continues, the number of auctions will be 580 for the full year 2010.
One of the election slogans of the Social Democratic Alliance, which forms the coalition government now with the Left Greens, was to form a “wall of shields” [skjaldborg] around the households in this country. Consequently many folks were hopeful that their situations would improve when this current government came into power. However, the various measures that have been implemented have been harshly criticized for falling abominably short of their goal.
Kastljós had one such example this evening. It interviewed one Magnús Magnússon, a filmmaker, who was diagnosed with leukemia a few years ago and is on heavy medication that renders him unable to work. His house, which he purchased in 2001, went into foreclosure last August. He had been paying around ISK 100,000 per month on his mortgage. He had also taken out a currency basket loan to buy a car, and of course we all know what happened with that when the krona collapsed.
Anyway, so his home went into foreclosure. With a new measure implemented by the current government aimed at helping people who are losing their homes, he was given the option of renting his home for up to 12 months from the credit institution that now owns it. The rent is determined by the property value of the house, which rose astronomically in the real estate bubble during the boom. The rent Magnús would have to pay for his home is about three times what he was paying for his mortgage, or some ISK 300,000 per month.
The mind boggles.
First after the collapse, he did as people in his situation were being urged to do, to speak to the Ráðgjafastofa heimilanna — a government counselling centre for people who are in trouble due to debt. They told him that his property was so valuable that there was nothing they could do for him — they had no measures to help him. The only thing they could suggest was to sell his house — at a time when the real estate market was frozen solid.
Magnús, who is not a young man [I’d guess in his early 60s] says he can’t manage to rent either, so he will now have to go live with whoever he can find to put him up.
Another statistic presented in the segment this evening: 40,000 households in Iceland are currently having trouble making ends meet. That’s pretty hefty in a country with a total of something like 100,000 households [I tried to find the exact number online last night but without success — but a few years ago I recall they were somewhere between 90-100,000].
Having spoken to Magnús, the Kastljós team moved on to interview the new Minister for Internal Affairs [which incorporates welfare] — Ögmundur Jónasson. He’s from the Left-Greens and is one of the more outspoken and radical ministers, and many people have high hopes that, with him in office, things may become slightly more humane.
There wasn’t much concrete that came out of the interview with him, but he made one comment that sent a shiver down my spine: that the International Monetary Fund frowns upon the measure of allowing people a 12-month grace period in which they can rent their homes.
Which is pretty goddamn terrifying if you ask me.