Spain's housing decrees favour vulture funds, pushing small owners to sell

Capping by law what a vulture fund can collect is not a hypothesis: Belgium approved it in July 2015, and recovery is capped at the price the fund paid for the credit. Applying that principle to housing would require an equivalent law, which is what associations such as the FRAVM are calling for.

In **July 2015** the Parliament of **Belgium** passed a law that changes the rules for funds buying debt at rock-bottom prices. The law leaves it to the judge to decide whether a creditor is acting as a vulture fund and, if so, that creditor can only recover the exact price it paid to acquire the credit.

## What Belgium approved in July 2015

The key lies in the judge's role. There is no closed list of funds or automatic label: it is the court that assesses, case by case, whether the creditor bought distressed debt in order to squeeze it. If the court concludes that it did, recovery is capped at the purchase price.

The mechanism was designed for sovereign debt, for countries where a fund buys unpaid credits and then demands far more. The affected funds took the law to court.

## The argument used by housing groups

Housing rights associations, including the **FRAVM** in Spain, argue that if a fund's take can be capped when it attacks a state, it should also be possible when it attacks a family's home. They want the principle extended —do not claim more than was paid for the debt— to the mortgage field.

That extension is not automatic. The Belgian law applies to sovereign debt; applying it to mortgage foreclosures would require a new law, with its own parliamentary process and its own legal challenges.

## From the state to housing

The **European Parliament** has passed resolutions urging the rest of the EU's countries to adopt similar laws, according to the groups backing the measure. Parties in favour of regulating housing use the Belgian law as proof that financial speculation can be curbed without dismantling legal certainty.

Those who defend capping the funds argue that regulatory uncertainty will push small owners to sell and that the funds will buy cheap. The remedy they propose combines wage rises with a legal ceiling on those funds' profits.

None of this is legal advice. Every transaction has its own deadlines and exceptions, and it is wise to consult a lawyer before making a move.