Filenews 9 December 2023 - by Eleftheria Paizanou
Borrowers are acquiring additional weapons to protect their properties from the risk of going under the hammer due to unpaid loans, with yesterday's approval of a package of legislation to strengthen the legal framework for foreclosures.
At the same time, tax relief is provided to borrowers who will join the Rent for Instalment Scheme.
With the votes of all parties, except for the 15 AKEL MPs who abstained, the extension of the responsibilities of the Financial Commissioner was approved, as well as the law proposals of the co-governing parties that further strengthen the rights of borrowers who will appeal to the Commissioner. At the same time, foreclosures will be frozen during this process.
The bill for the establishment of a Special Jurisdiction at the level of the District Court to which borrowers with bad loans secured by a primary residence worth up to €350,000 will appeal was approved yesterday with the votes of all parties. AKEL abstained.
The back on the government's bill on the "foreclosure court" was turned by the three EDEK MPs, who voted against it. And this, as explained by the president of EDEK Marinos Sizopoulos, because the bill does not meet the conditions set by the party and does not support vulnerable groups. "Along the way, it will become clear who is responsible and who is irresponsible," Sizopoulos said.
Previously, amendments by EDEK, AKEL and the Greens had been rejected. There was not the required majority to discuss as a matter of urgency the proposal of AKEL and the Greens to freeze the sale through the issuance of a court decree.
Out-of-court dispute resolution
From the day the new legislation is published in the Official Gazette of the Republic, borrowers with bad loans will be able to appeal to the Financial Ombudsman for the out-of-court settlement of disputes they have with creditors in cases of over-indebtedness, unfair terms and foreclosures.
According to the bill, borrowers with an initial loan amount of up to €350,000 and with a primary residence or business premises of up to €350,000 secured will be able to apply to the Commissioner, requesting the appointment of a mediator to resolve the dispute with the creditor, with the aim of avoiding the sale of the property.
At the same time, a second chance is given to those who have terminated loans with an initial loan amount of up to €350,000, who within 6 months will be able to appeal to the Financial Commissioner, requesting the appointment of a mediator for an out-of-court settlement of the dispute.
In addition, borrowers with an initial loan amount of up to €350,000 and a mortgage on business premises worth €750,000 will also be able to appeal to the Commissioner. At the same time, a provision was included so that in case a court decision is issued to postpone the court proceedings for the purpose of appealing to the Financial Commissioner, the creditor has the obligation to suspend the sale process of mortgaged property that secures a terminated credit facility until the expiration of the postponement given. At the same time, the creditor's ability to send a negative decision on a borrower's request for restructuring of a credit facility in arrears is clarified.
Suspension of divestment
Following yesterday's approval of the law proposals of DIKO, EDEK and DEA, the Commissioner's decision for an out-of-court settlement of a dispute should be issued within 45 days after the borrowers' appeal.
The Financial Ombudsman will examine disputes between a mortgagee and a mortgagor regarding the amount declared by the mortgagee in notice "IA" when selling a primary residence with a value of up to €350,000.
All mortgage borrowers of existing non-performing loans with their main residence up to €350,000 acquire the right to appeal to the Financial Ombudsman. Subsequently, in case of non-acceptance of the Commissioner's decision by the creditors, the sale procedure will be suspended until the Court decides on the amount of the amount due.
With the bill on Courts, voted yesterday by the Plenary of the Parliament, a Special Jurisdiction will be established at the level of the District Court, where citizens will appeal with bad loans secured by the main residence, worth up to €350,000.
The Supreme Court will be able to appoint a number of judges for the purpose of hearing cases relating to disputes arising between a borrower, guarantor or collateral provider and a creditor concerning a credit facility secured by a principal residence, the estimated value of which does not exceed €350,000. Also, the Special Jurisdiction will be open to complaining disputes that may arise between borrower and creditor, may also concern over-indebtedness and/or unfair terms.
PoD: A milestone for stability
An important milestone for Cyprus' fiscal stability and financial perspective is the adoption of bills that complement the package of measures to tackle non-performing loans and protect vulnerable borrowers, says President of the Republic Nikos Christodoulides.
In a written statement, he said a long-pending issue that posed a risk to the country's fiscal stability and financial credibility had been resolved after several months of persistent efforts.
As he said, the comprehensive approach of the package promoted by the Government completes the legislative framework that will constitute the net of effective protection of vulnerable and consistent borrowers. "The responsible political forces of the country, by voting in favour of the package of measures but also by their proposals and cooperation with the Government, have contributed catalytically towards this achievement. I am optimistic that the implementation of prudent policies will shield our economy and bring further growth and progress for our country," he concludes.
Party affiliations
The parties' positions were divided and varied before the legislative package on foreclosures was adopted.
- DISY MP Haris Georgiades said the legislation is a step forward but not a perfect solution, stressing that the problem will not disappear nor will mass foreclosures begin. Georgiades said that we should not cultivate fears or exaggerated expectations for a perfect solution.
- AKEL MP Aristos Damianou said that Parliament is called upon to pass an unnecessary law in relation to Special Jurisdiction, as – as he said – nothing will change. He spoke of a carabinate violation of powers, noting that this bill will not do something that the Court does not do today.
- DIKO President Nicholas Papadopoulos said that the problem of foreclosures has not been solved for ten years and today a proposal is being presented by the Christodoulides government, which they consider good, with a comprehensive package of eight measures. "These strike a balance between protecting bona fide borrowers and preventing bad faith borrowers from abusing the system," he said.
- ELAM MP Sotiris Ioannou said that Cyprus has become a jungle, where investment funds loot property, the future and the hope of many. He also spoke of political games by many on the backs of citizens.
- The president of EDEK Marinos Sizopoulos spoke of the appalling unaccountability against citizens by banks due to the legislation on foreclosures and the insolvency framework.
- MP Alekos Tryfonidis said that the Government is trying, to a large extent, to provide solutions and solutions for NPLs.
- Green MP Stavros Papadouris expressed the view that the legislation is a first step, but said that we should not be looking for first steps at this time but should have made sure that the issue is resolved.
