Recourse mortgages made Spanish homeowners refuse to let housing markets clear

Evidence

Add to this the fact that Spanish mortgages are recourse loans, meaning that the bank can come after the debtor for the original loan—forever—and not for just the current value of the property, and mortgagers have every incentive to sit tight and not allow the market to clear, thus making the situation worse by inches. In the United States you can walk away from a mortgage and the house is the bank’s problem. In Spain, when you walk away from the house, the mortgage debt is still your problem. — Mark Blyth, Austerity, 189

Categorization

• XREF: The US non-recourse vs Spanish recourse loan contrast is a crisp institutional comparison echoed across comparative political economy of finance.