Filenews 11 December 2022 - by Eleftheria Paizanou
Foreclosures are one of the first issues that the new government, which will emerge from next February's elections, will have to deal with. From the speeches of the party leaders during the discussion of the state budget in Parliament, there was a consensus - at the level of objectives - to find a balanced solution for foreclosures, which would not affect the banking system, but would also protect borrowers who are in real financial problems and who cannot demonstrably pay their instalments.
In the meantime, the Rent Against Instalment Scheme is expected to be implemented, in which the non-viable borrowers of the Estia Scheme will be included. This is a plan that is being discussed inside and outside Cyprus and the final approval by the Commission is expected soon to be implemented.
On the part of the Ministry of Finance, it has been said several times that around the beginning of next year it is expected that this plan will be implemented. As it turns out, on the eve of the elections there will be news about this plan, which has been under discussion since 2014.
The delay in implementing the plan was highlighted in their budget speeches by the opposition party leaders. Now, after the serial in Parliament and the final decision of the President of the Republic to sign and put into effect the new law, foreclosures will be on ice until the end of January 2023. That is, main residences worth up to €350,000, business premises with an annual turnover of €750,000 and parcels of land worth up to €100,000 will not come under the hammer
However, the suspension will end a few days before the first round of the presidential election. At that time, banks and credit-acquiring companies will start sending warning letters to borrowers who are not servicing their loans, informing them that the foreclosure of their property will begin. Under the new legislation, after the banks send the last letter of formal notice, real estate can come out on the hammer after 45 days.
Therefore, the auctions for the three specific categories of real estate will start after March 17, i.e. a few days after the new President of the Republic assumes the presidency. Depending on the candidate who will be elected, the actions taken by the new Government will be similar.
What will Averoff do?
In the event that the president of DISY Averoff Neophytou takes over the reins of the state, it is a given that he will follow the same tactic as today. It will insist on the strict application of the law, so as not to get into trouble for the banking system and the economy in general. It will await the results of the Instalment Plan against rent and may consider some other balanced arrangements that will make it easier for borrowers.
Averoff Neophytou, who is supported by DISY, is against changing the legal framework of foreclosures, which was approved by a majority of the Parliament in 2018. In addition, it is expected to advance the bill for the establishment of Special Jurisdiction at the level of the District Court, known as the foreclosure court, which will hear cases of financial disputes including foreclosures. Of course, the collaborations with the parties will be of interest in the way Mr. Neophytou will manage the issue, in the second round of the elections, in case the president of DISY passes. Based on the positions of the parties with which he will cooperate, he will act accordingly.
How Christodoulides will move
On the other hand, Nikos Christodoulides, who is supported by the alliance of DIKO, EDEK and DHPA, will seek to promote some regulations, which the leaders of the three parties have already mentioned in plenary. Nor does Mr Christodoulides consent to the freezing of foreclosures, something that the parties that support him have shown at some stage with their stance.
For example, instead of freezing the law, DIKO and EDEK had proposed to put to the vote, in the form of urgency, the proposal for a law on the Foreclosure Court. Essentially, the bill reflects the government bill that was withdrawn by the Government due to the many party amendments attempted. The draft law had been ruled by the Legal Service as unconstitutional, as it includes provisions that cause constitutional issues, such as the appointment of the judges of the Special Court by judges of the Supreme Court, as well as the issuance of decisions within sixty days.
The Legal Service is examining both the draft law and the new bill prepared by the Ministries of Finance and Justice. Moreover, DHPA had put pressure on the Credit Acquiring Companies, which consented not to sell off main residences worth up to €350,000 belonging to vulnerable groups of the population.
In their speeches, Nikolas Papadopoulos, Marinos Sizopoulos and Marios Karogian had made specific proposals to address the problem of bad loans. In the event that Nikos Christodoulides assumes the presidential post, he is expected to promote the creation of the Foreclosure Court, on the basis of the DIKO-EDEK proposal, in conjunction with the recommendation of the Central Bank for the suspension of foreclosures, under specific conditions, by a special court order. At the same time, targeted protection of vulnerable inflation groups from foreclosures will be examined, through arrangements that will not endanger the stability of the banking system and the Cypriot economy in general. In addition, at the request of the parties that support him, an extension of the powers of the Financial Commissioner will be promoted and at the same time the possibility of his decisions being binding will be considered.
How Mavrogiannis is expected to react
AKEL, as is well known, disagrees with the legal framework for foreclosures and demands that safeguards be put in place to protect the main residence. Based on the announcements made by the candidate who supports AKEL, in the event of his election, Andreas Mavrogiannis will take actions to protect the main residence.
Among other things, it will proceed with the creation of a mechanism to protect borrowers from illegal and abusive practices by banks in loans and charges, on the basis of legality. KEDIPES will also seek to become a body for the protection of the main residence and the small business premises and at the same time a guarantor of sustainable restructurings. At the same time, it will proceed with the extension of the institution of legal aid, to cover the registration of a lawsuit and the issuance of an interim order suspending an auction, in order to ensure the right of vulnerable groups to access justice. It will also take initiatives to regulate family loans to end the transfer of debt to divorcees and future generations. It will, in line with its announcements, strengthen bankruptcy and insolvency laws and make arrangements that will help speed up court rulings in disputes between banks and borrowers.
