Housing Boom Mortgages Flood Courts Two Decades Later

By Jessica Turner 10/10/2026 3 min read 25 views

Twenty years after the housing boom, its mortgages are returning to court. According to the Mortgage Foreclosure Statistics published by the National Statistics Institute on September 16, 46.7% of foreclosure proceedings initiated on homes in the second quarter of 2026 correspond to loans taken out between 2005 and 2008. During the same period, proceedings on primary residences of individuals increased by 27.5% year-over-year, following a first quarter in which the increase reached 38.1%.

The rise has been ongoing. In 2025, courts recorded 31,416 mortgage foreclosures, a 35.6% increase from the previous year, according to the General Council of the Judiciary. Andalusia, Catalonia, and the Valencian Community currently lead in the number of proceedings.

Bank mergers and fund sales

José Montero, partner at Montero de Cisneros and founder of Defensa Contra Fondos, argues that the date of these mortgages explains much of the problem: “A loan from 2006 has gone through bank mergers, bailouts, and often one or more sales to investment funds over twenty years.” The longer this chain, the easier it is for a link to break. That broken link could save a home.

From Maricarmen’s rent to a 2006 mortgage: the same player on the other side. The eviction of 87-year-old Maricarmen Abascal from her rent-controlled apartment in Madrid on September 23, where she had lived for 71 years, after a real estate fund acquired the building, led the government to approve the so-called “Maricarmen decree” on housing this week. Her case involves rent, not a mortgage, but Montero highlights a common pattern: “Maricarmen has put a face to something we see daily on another front: thousands of families with bubble-era mortgages now facing a fund, not their bank. And many don’t know until the lawsuit arrives.”

Debt sold without notice

Over the past decade, financial institutions have sold portfolios of unpaid loans in bulk to specialized funds, which acquire these debts for a fraction of their face value and then demand full payment. For the debtor, the change is often invisible until they receive a letter from an unknown company or a lawsuit where the plaintiff is no longer their bank.

“The first question isn’t how much the family owes, but who’s demanding payment and with what paperwork,” Montero explains. “The fund must prove that this specific loan, with its number and balance, is included in the transfer. When the documentation is generic, incomplete, or inconsistent, the court may rule they’re not authorized to foreclose.”

Montero emphasizes there are no shortcuts. The Supreme Court has restricted the right to redeem litigious credit—the ability to settle the debt by paying what the fund paid—when the loan is sold as part of a portfolio. “That’s why defense can’t be a slogan. You have to review the chain of transfers, the original loan terms, and every notification. It’s technical work, not ideological.”

Five signs a mortgage has been sold to a fund

Letters arrive from a company that isn’t the bank, typically a collection agency, demanding payment.
The lawsuit lists an unknown company as the plaintiff, often based outside Spain.
The amount claimed doesn’t match the borrower’s calculations or includes unrecognized interest and fees.
The transfer was never formally notified, or the documentation was incomplete.
The loan contains clauses now challenged in court, such as early termination, interest rate floors, or IRPH, common in mortgages signed before 2009.