Filenews 17 September 2023 - by Eleftheria Paizanou
As soon as the mortgage foreclosure freeze expired at the end of January, banks and credit-acquiring companies sent hundreds of letters to borrowers in two months to hammer out a total of 252 primary residences because they were not meeting their loan obligations.
Of the total notifications, 213 concerned primary residences with a market value of less than €350,000 and for 39 their value exceeded €350,000.
Despite the fact that these houses were put into foreclosure, their auction failed. The exception was eleven residences, of which seven are villas, with a market value of more than €350,000 and four under €350,000, which after the failure of the auction have been sold directly to third parties or purchased by the mortgagee six months after the completion of the foreclosure process.
The suspension of the law approved by Parliament has been in place since October 2022 and was completed at the end of January 2023, i.e. on the eve of the presidential elections. In fact, the perimeter of the legislation provided for the suspension of auctions for main residences up to €350,000, business premises with a turnover of €750,000 and parcels worth up to €100,000.
Central Bank (CB) data for the first quarter of the year (January 1 to the end of March) show that in the two months following the freeze, auctions had picked up speed.
It should be noted that many times both credit acquiring companies and banks have publicly claimed that they do not sell primary residences worth up to €350,000, however, CB data show otherwise, as the letters sent by creditors to borrowers with residential premises had increased compared to the previous quarter (4th quarter of 2022). In fact, letters of formal notice from creditors to debtors, informing them that there is an intention to sell the mortgaged property, doubled from October to December 2022. At that time, auctions were not held by law.
Three main residences sold off in '22
According to CB data, until March 2023, 252 notifications were sent for the sale of primary residences with a total value of €64.9 million compared to 102 notifications for primary residences worth €38.4 million. end of 2022. The warning notices for the sale of primary residences were followed by the sending of 173 letters to borrowers, setting the sale date through the first auction, for residential properties worth €42.9 million.
The 143 mortgaged primary residences had a market value of less than €350,000. 30 were worth more than €350,000. Compared to the last quarter of 2022, the number of these letters is four times higher, as at that time letters were forwarded to borrowers stipulating the sale of 40 first homes worth €21.7 million.
Despite the efforts of creditors, until March 2023 no real estate was sold at the first auction, and the same fate befell the second auction. In contrast to the end of 2022, when at the first auction three main residences with a market value of €947,000 had been sold.
Moreover, during the same period, another first residence worth €334 thousand. had been sold in the second auction process.
In detail, according to CB data, after the failure of the first auction, until March a mortgaged property that is a main residence worth €180,000 had been sold directly to third parties. At the same time, in December 2022, a main residence worth €454,000 had been sold through the same procedure.
At the last stage of the procedure set by law, it is foreseen that the mortgagee can buy the property after six months from the process of the first auction. In the first quarter of the year, creditors purchased ten main residences with a total market value of €4.3 million, compared to 8 properties worth €3.9 million. in the last three months of 2022.
Waiting for the next move
From July until the end of October 2023, creditors voluntarily refrain from foreclosures of primary residences worth up to €350k, in an effort to give the executive time to prepare a comprehensive package of measures to strengthen borrower protection and the legal framework.
It is worth noting that the parties expect Finance Minister Makis Keravnos to submit a bill to expand the powers of the Financial Commissioner, with the aim of increasing the number of beneficiaries who will apply to the Body for the Extrajudicial Settlement of Financial Disputes. At the same time, they expect to improve the provisions of the bill for the establishment of a special jurisdiction, known as the Foreclosure Court.
The discussion of the draft law of the co-governing parties DIKO, EDEK and DEPA, which reflects the mechanism of the Central Bank for the management of bad loans, which will complement the Court of Foreclosures, is also pending. Under the mechanism, borrowers who have as collateral their main residence, worth up to €350k, will be able to go to court and file an application to set aside the notice of intended sale within 21 days from the date of receipt of the letter.
Under the hammer 1,156 properties
In addition to letters and other procedures for the sale of primary residences, by March 2023, hundreds of borrowers had been notified to auction 1,156 properties worth €237.4 million. For 1,490 cases, a date was set for the sale of the properties, of which 78 properties with a market value of €14.7 million have been sold through auction.
As can be seen from the Central Bank's data, out of the total properties achieved by the sale, 35 were under construction/ready-made houses and apartments which were sold at a price of €6.3 million, five commercial properties worth €1.1 million, seven plots worth €3 million. and 30 parcels worth €4.1 million. Moreover, during the second auction, 19 houses, apartments, commercial properties and parcels were sold at a price of €2.5 million.
They return to the hands of the creditors
In addition, after the failure of the first auction, 25 properties worth €4.4 million had been sold directly to third parties. While another 343 mortgaged properties worth €40.7 million had been purchased by the mortgagee six months after the completion of the first auction process. According to CB data, from October to December 2022, 67 mortgaged properties with a total value of €17.2 million had been sold during the first and second auctions, of which 28 concerned apartments and 23 parcels. At the same time, 36 properties were sold directly to third parties at a price of €11.8 million. while another 762 ended up in the hands of lenders six months after the auction at a price of €90.8 million.
