Paper short abstract:

Granting mortgage loans to customers with a high potential of insolvency became a widespread practice in Spain during the recent housing bubble. A practice, nevertheless, that made sense in the social settings where bank clerks, real estate agents or mortgage brokers found themselves at that time.

Paper long abstract:

Granting mortgage loans to customers with a high potential of insolvency became widespread practice in Spain during the recent housing bubble that came to an end in 2007, resulting in an unprecedented spate of home repossessions during the current crisis. As the regulation of these activities was very loose, only in some cases did they entail illegality. Nevertheless, if power relations, structural determinations and asymmetrical access to information are taken into account, they can very well be depicted as abusive.

In order to tackle this issue, the ethnography has confronted the experiences of mortgage borrowers to those of bank clerks who, under pressure from their superiors, took advantage of their long-lasting relationships with humble customers; of real estate agents and mortgage brokers who saw an opportunity in the middle and working classes' aspiration to access home ownership; of executives in investment banking institutions who devised sophisticated financial products aimed at masking risk. For all these actors, almost indiscriminate credit lending was not only a profitable business, but also a way to comply with norms, values and expectations shared in their social settings.

The ethnography shows that such practices had a systematic nature, and should not be attributed to individual, isolated behaviour. But it is also apparent that there was always some scope for resistance and for individual, unorthodox decision-making guided by prudence and principles of moral economy. The practice of predatory and high-risk mortgage lending, as well as its repudiation, need thus to be understood in their socio-historical context.

Paper Download (634 KB)