By Nigel Davies
MADRID (Reuters) - Spanish Economy Minister Luis de Guindos promised on Monday that no needy family will go homeless over mortgage arrears, responding to public fury at a homeowner's suicide as she was being evicted.
Facing accusations that politicians and banks are complicit in de facto "murder", Spain's banking association said its members would suspend eviction orders for two years for those borrowers worst hit by economic crisis and record unemployment.
Banks have repossessed close to 400,000 homes in Spain since a property bubble burst in 2008 and the nation subsequently sank into recession, throwing millions out of work and unable to keep up mortgage payments to the banks.
Last Friday's suicide of 53-year-old Amaia Egana has inflamed a public already angered by what they see as a lack of compassion among Spanish banks, many of which have benefited from taxpayer-funded bailouts organized by the political elite.
Egana, a former Socialist councilor in northern Spain, jumped to her death from her fourth-floor flat as bailiffs were trying to evict her under foreclosure laws.
Speaking in Brussels, de Guindos said action was vital to avoid evictions at a time when huge numbers of homes, built during a frenetic property boom before 2008, lie unoccupied.
"In Spain right now, we have nearly a million empty housing units. In this situation, the government and the economy ministry ... has to take steps so that no family in good faith goes without a home. This is our commitment," he said.
Public pressure prompted Prime Minister Mariano Rajoy to call for officials from his conservative People's Party and the opposition Socialists to speed up negotiations on reforming the eviction laws during talks on Monday.
Fans at a Primera Liga soccer match on Saturday protested about the fate of Egana, who killed herself in the Basque town of Barakaldo, and countless others who are losing their homes.
"They're not suicides. They're murders. The banks and politicians are accomplices. Stop the evictions!" read a banner held up by supporters of Rayo Vallecano, which plays in a working class district of Madrid.
Heads of the economy departments of both main parties were expected to look at the possibility of granting moratoriums on mortgage payments for families in dire straits and to change the legal proceedings that lead up to an eviction.
However, the Spanish Banking Association (AEB) said its members had already agreed with the government last week to suspend eviction cases for two years for those most in need.
This showed "...the commitment of the AEB's members, for humanitarian reasons and because of their social responsibility, to stop evictions during the next two years in those cases of extreme need", it said in a statement on Monday.
Protesters say this will not go far enough given thousands will face difficulties in the next few months.
Egana's death, and another eviction-related suicide in October, have intensified a popular backlash with many accusing the banks - some of which will receive part of an up to 100 billion euro European bailout - of callous disregard for the effects of unemployment, which has hit 25 percent.
However, a number of banks themselves are in dire straits because of the failure of many borrowers, ranging from small homeowners to major property developers, to repay their debts.
On Monday protesters gathered outside the People's Party headquarters in central Madrid before walking to parliament.
"We are due to be evicted on the 20th of this month, and we have nowhere to go but the street," said Angel Moran, a 59-year-old painter.
He said he had been out of work for four years, had a young daughter to support and the two other people living in his home to share the costs were now also without work.
As property prices have tumbled about 30 percent, hundreds of thousands of people who took on huge mortgages during the boom years now owe more than their home is worth.
Under Spanish law, even when borrowers turn over their homes to the bank, they still owe the entire amount of the mortgage.
A citizens' movement called "Stop Evictions" has organized protests at apartment buildings to block court workers from evicting families.
The pressure by Stop Evictions and other groups led the government to ask banks earlier this year to forgive mortgage debt for properties worth less than 200,000 euros and where all family members are unemployed.
A group of senior judges has pushed for a cross-party agreement on eviction reform, and a police union said it will support officers who refuse to take part in an eviction.
On Saturday, northern Spanish mortgage lender Kutxabank said it was suspending repossessions after the suicide of Egana.
Last week, European Union Advocate General Juliane Kokott issued a non-binding report concluding that Spanish legislation on evictions contradicts European norms for protecting consumer rights. Europe's highest court will rule on the issue.
(Additional reporting by Marco Trujillo and Ibar Aibar, and Robin Emmott in Brussels; Editing by Fiona Ortiz, David Stamp and Giles Elgood)