Filenews 13 August 2022 - by Eleftheria Paizanou
Much more implications are the signing by the President of the Republic of the law to freeze foreclosures until the end of October. As it seems after the recent decision of the Supreme Court, which ruled as constitutional the suspension that the Parliament had given last year to the law on foreclosures, the hands of President Nicos Anastasiades were tied as there was no legal and constitutional issue on which he could argue in order to appeal to the Courts.
It is recalled that last June, the Supreme Court ruled that there was no diversion from the Constitution from the three-month extension of the suspension of foreclosures last summer. At the same time, it decided that the legislation is not contrary to the Constitutional Principle of Separation of Powers, does not overturn the economic policy of the executive and does not affect the acquired rights of the parties. Perhaps these were the reasons that blocked the way for President Anastasiades to address the Court, despite the intense pressure exerted by the Ministry of Finance. It is worth noting that the legislation approved on July 14 by the Plenary Session of the Parliament is exactly the same as last year's that was deemed constitutional.
Their only difference is that last year the freeze on foreclosures was until October 31, 2021 while this year it is until October 31, 2022. Yesterday's publication of the law in the Official Gazette is a "victory" for the opposition parties. On the other hand, in the Ministry of Finance there is a strong concern that worries that this will be a springboard for the opposition parties to proceed with a new legislative regulation and the freeze on foreclosures to be implemented for a longer period of time.
This, as a government source told us, will be catastrophic in the capital of banks, will disrupt the proper functioning of the market - management of non-performing loans and will affect the interest of new servicers in licensing. What the ministry is particularly concerned about is that no changes will be made to the general framework of the legislation. The Finance Ministry had warned that the suspension would affect the disbursement of the tranche by the Recovery Fund.
Who benefits from the suspension of the law
After the publication of the law in the Official Gazette of the Republic, the freeze on foreclosures will apply from August 12 to October 31. For the next 80 days there will be no sale of a main residence worth up to €350,000, a business premises that has an annual turnover of €750,000 and parcels of land worth €100,000. However, due to the legal procedures that have taken place, the implementation of the law has been effectively delayed by a month. If the legislation were not referred back and rejected by Parliament, the suspension of the law would have been in place since last month, as the law had been approved by Parliament in mid-July. Perhaps this delay has helped banks and credit-acquiring companies somewhat to promote the foreclosures that had been planned, some time ago.
POINT OF VIEW
Now the hardships begin
The implementation of the foreclosure freeze is expected to set a precedent until the end of October, as the opposition after its victory will seek to make further changes to the legal framework for foreclosures. The next move by the opposition parties worries the finance ministry about the risks that may arise in the banking system and the economy. It would be good for the ministry to anticipate the next action of the opposition and invite the parties to dialogue so that together they can find solutions that will protect borrowers who really cannot cope with their obligations and "fight" the strategic defaulters.
