Russians took out mortgages denominated in foreign currencies
Moscow - AFP
Yekaterina Kolotovkina choked back tears as she told how her world collapsed within a few short months.
In March, her husband died and she and her three-year-old son now risk being evicted from their Moscow apartment as she struggles to make payments.
In 2008, the 40-year-old took out a mortgage worth nearly $180,000 to buy a small apartment on the outskirts of the Russian capital. The monthly payments were fixed in US dollars.
Kolotovkina is one of tens of thousands of Russians who took out mortgages denominated in foreign currencies, lured by lower interest rates, in the years before the fallout of the Ukraine crisis and low oil prices ravaged the Russian economy.
As the value of the Russian ruble collapsed under the pressure of falling oil prices and Western sanctions last year, her $2,000 monthly installments doubled in ruble terms.
Kolotovkina's 52-year-old husband had been sick with worry that the family would no longer be able to make mortgage payments.
"He was very distressed. His blood pressure was going up and down," Kolotovkina told AFP. "He died of a stroke."
The economic crisis in Russia has spared few people, but foreign currency mortgage holders have been among those who have suffered most.
In recent months, they have struggled to keep up with payments that often exceed their families' monthly income.
They have slashed their spending, borrowed from friends and in some cases taken out additional bank loans.
Many feel trapped as selling is not even an option as they would still end up owing money to the bank.
They have also staged a number of pickets and flash mobs in Moscow and Saint Petersburg and bombarded their banks, officials and MPs with requests to recalculate their loans in rubles using the foreign currencies' pre-crisis exchange rate.
An Orthodox church in Moscow has held prayers in their support.
Last week several mortgage holders went on hunger strike in a last-ditch attempt to get lenders and the government to offer them an acceptable solution.
"This is the only way to change anything," said Larisa Morozovich, adding her bank had offered to extend the loan period and pass over the mortgage to her daughter when she grows old.
"I understand that this is very dangerous," the 38-year-old said of the hunger strike, breaking into tears in front of reporters.
Borrowers had hoped that President Vladimir Putin would take their side in their dispute with banks.
But the Russian strongman, speaking during a televised call-in last week, refused to bail them out, saying they had voluntarily taken on additional risks by borrowing in dollars, euros and the Japanese yen.
Larisa Rublyova, another hunger striker, said this was a major blow for them.
"Of course we'd expected a different reaction," she told AFP, adding that they would keep refusing food.
"What else is there for us?," Rublyova said softly after several days of fasting.
With the ruble having bounced back partially, Putin said the worst of the crisis had passed, but with borrowers still facing payments about 50 percent higher they fail to see any light at the end of the tunnel.
This month, mortgage holders appealed to Putin in an open letter accusing Russian banks of routinely mis-selling the mortgages.
"Most of the borrowers have reached their physical and psychological limit," said the letter, their third appeal to Putin.
"Many families who had taken out mortgages planning to have kids are now on the brink of divorce," it said, adding that some were contemplating selling their organs.
Hundreds of families have already been taken to court over arrears and may face eviction. Three families have already been ordered to vacate their apartments.
Irina Safyanova, a spokeswoman for the group of hard-currency mortgage holders, said the pressure on borrowers had been so intense that three men -- Kolotovkina's husband included -- had died recently of strokes.
"They worked a lot and worried," she told AFP. "One of them died during a business trip."
Borrowers, some of whom acknowledge their poor judgement, are growing increasingly desperate.
On Sunday, one man chained himself to the fence of a foreign embassy in Moscow.
This month a 89-year-old wheelchair-bound WWII veteran picketed the seat of the Russian government building in support of her granddaughter who had taken out a hard-currency mortgage.
- 'Inhumane banking system' -
Igor Nikolayev, director of the FBK Grant Thornton Institute of Strategic Analysis, said the mortgage-holders' demands for government intervention were justified.
"The hard currency mortgage holders have justified grievances against the authorities," Nikolayev told AFP, arguing that the government guarantees the ruble's stability and should share responsibility for their plight with the banks.
Banks say they have tried to reach a compromise with their clients.
The target of many complaints, Delta Credit, which is part of France's Societe Generale, said it had already come up with "individual solutions" for more than 1,000 families who have taken out dollar-denominated mortgages.
But many say what banks are offering would only prolong their misery.
"The banking system we have now is utterly inhumane," said Kolotovkina.
Shaken by her personal tragedy, fellow borrowers pitched in to help her make her April payment.
Her future looks bleak but she is not giving up just yet.
"I don't know what will happen next but we are full of resolve."