Filenews 25 January 2023 - by Eleftheria Paizanou
A formula for making the foreclosure framework more effective will have to be found from the first days of its emergence by the new President and its financial staff. The new Government will take over the reins of the country, with the Law on Transfer and Mortgage now reactivated, as the last freeze on foreclosures decided by the Parliament last November expires at the end of the month.
It is worth noting that the recent decision of the Supreme Court, which declared an earlier three-month freeze on foreclosures to be constitutional, seems to complicate the situation somewhat. This is because at any time Parliament can, in theory, put foreclosures on ice, while due to judicial precedent there are some obstacles for the President of the Republic to proceed with the reporting of the law to the Supreme Court.
However, depending on the candidate who will emerge victorious in the ballot box on February 12, the policies they will implement will be similar, at least according to the programmatic positions they have made public. From a study of the positions of the three main candidates, Averoff Neophytou, Nikos Christodoulides and Andreas Mavrogiannis, it seems that each will face the issue with some differences. It is common to all that borrowers have access to justice, either through the establishment of special jurisdiction at the level of the District Court, known as the foreclosure court, or through the issuance of an order suspending the auction.
Averoff: Against freezing
The president of DISY Averoff Neophytou had several times publicly expressed his strong disagreement with the suspension of the law. A stance taken by his party many times during the votes to freeze the law in the Plenary session of the Parliament. In fact, he believes that the constant freezing of foreclosures facilitates strategic defaulters of loans, while loan guarantors remain exposed. According to the policy axes included in Mr. Neophytou's governance program, in case he takes over the presidency, he will continue the effort to reduce bad loans, while he will implement the €400 million Rent Versus Instalment plan. This scheme will be added to the ESTIA Scheme, the OIKIA Scheme and the Central Equal Burden-Sharing Body Scheme. As he argues, the percentage of households that delayed repayment of an instalment or bill due to financial difficulties has fallen from 33.6% in 2013 to 14.7% in 2020 and is now even lower. At the same time, it insists on the establishment of a Special Court for non-performing loans, which, however, will not include provisions that facilitate bad payers, hindering the smooth processing of the loan restructuring.
Christodoulides: In favour of Commissioner's proposal
For his part, Nikos Christodoulides has stated many times publicly that he disagrees with the freezing of foreclosures, but the parties that support him (DIKO, EDEK and DYPA), had given a positive vote to the last suspension of the law. Mr. Christodoulides is in favour of the compromise proposal of the Financial Commissioner Pavlos Ioannou, which he had proposed in November to the Parliament, to prevent a new suspension of the legislation. In other words, if he takes over the presidency, he will apply this formula.
The proposal provides for the protection of the main residence up to €350,000, with the income criteria of the Estia Scheme, and the business premises with a turnover of the owner company up to €350,000 and with a maximum value of business premises (of the property) of €600,000. In addition, it provides for the protection of parcels of land, on which professional activity is carried out, with the certificate of registration of the borrower in the Farmers' Register of CAPO, with the maximum value of the piece at €100,000. In addition, Nikos Christodoulides seems to be waiting for the implementation of the Rent Against Instalment plan and will promote the operation of the foreclosure court.
Mavrogiannis: Targeted armor
Andreas Mavrogiannis promises to take actions to shield the main residence and the small business premises, something that was reflected many times in AKEL's legislative efforts. Among other things, it states that it will proceed with the creation of a mechanism to protect borrowers from illegal and abusive practices of banks in loans and charges, the transformation of KEDIPES into a body for the protection of the main residence, the small business premises and at the same time a guarantor of ensuring sustainable restructurings. It wants to expand the institution of legal aid to cover the filing of a lawsuit and the issuance of a temporary auction suspension order, make arrangements for family loans to end the transfer of debt to divorcees and future generations, strengthen bankruptcy and insolvency laws, and demand an acceleration of court rulings in disputes between banks and borrowers.
