Some migrants in Spain default and decamp

By Paul Day

MADRID (Reuters) - Rodolfo Jaramillo looks around his Madrid apartment at the stacked stereo system and a picture of parakeets on the wall, and shrugs. It's been three months since he paid a mortgage installment and he plans to return to Ecuador.

Jaramillo, 40, has lived in Spain for nine years. Over the last six months, he has lost his job in construction, his wife is stuck in Quito after her return visa was revoked and his two children, both Spanish citizens, have joined her.

Alone and jobless in Spain, he sees no choice but to leave his debts and go home.

"The bank has offered different mortgage terms, but I don't have the money. The moment I get rid of this flat, if I have to give it up or they take it, I'm going back to Ecuador," he said.

During Spain's boom years, banks energetically courted immigrants: now numbering around 5 million, some like Jaramillo are heading home. Those who stay have dwindling earnings to repatriate as competition for jobs rises and wages slip.

Similar situations are emerging elsewhere in Europe as an immigrant tide turns back from potential recession: there is anecdotal evidence some of the Polish workers who restored many British homes are returning, and Britain's Border Agency has said fewer eastern Europeans sought work in the second quarter.

"Last year, I was working on a housing construction site in Madrid for 1,800 euros a month. No one's building houses anymore and the few jobs left, if you can find them, pay 1,300 euros maximum," said Franklin Vallejas, 42, also from Ecuador.

Spain's economy is forecast to enter recession this year and construction, until recently a major source of employment for immigrants, has stagnated as the housing market imploded.

So far between one and two percent have returned to their home countries, according to a study by Luis Miguel Doncel, professor of economics at the Rey Juan Carlos University.

Money sent home by foreign nationals living in Spain fell 5 percent to 3.6 billion euros in the first half of 2008 from 3.8 billion a year earlier, according to the Bank of Spain.

International money transfers are one of the largest sources of foreign currency for Latin American countries such as Mexico and Ecuador: for both, income from citizens living abroad fell in the second quarter.

TARGET MARKETS

Loan defaults among Spain's immigrant community are also set to rise. According to a study by Javier Morillas, a professor of applied economics at Madrid's San Pablo-CEU university, over 90 percent of non-performing mortgages are held by immigrants.

Banks themselves provide no such breakdown of loans, but since immigration boosted Spain's population by more than 10 percent in a decade they must have taken many home loans.

The banks won the business through aggressive marketing campaigns, opening specialized branches in neighborhoods with growing immigrant populations and pitching fiercely for slices of the lucrative money-transfer business.