Filenews 14 January 2024 - by Eleftheria Paizanou
The formula agreed last month to strengthen the legal framework for foreclosures, through the expansion of the powers of the Financial Ombudsman and the imminent operation of the Special Jurisdiction, known as the Foreclosure Court, is considered balanced.
This will be seen in the coming months in practice, when borrowers at risk of losing their primary residence will want to take advantage of the new law. Every day, dozens of borrowers call the Financial Dispute Resolution Body, asking for information on the new framework and the procedures they need to follow to proceed with the out-of-court settlement to protect their primary residence.
A few days ago, the Council of Ministers also appointed the nine-member Board of Directors of the Agency, which is expected to initiate the procedures for the appointment of the Financial Commissioner. This position has been vacant since July 1, following the end of Pavlos Ioannou's term.
The Board of Directors is expected to proceed for the second time with the announcement of the position of Commissioner, as the first time the procedure was initiated on the basis of the previous law. The Government has always linked the appointment of the new Financial Commissioner to the implementation of the new legislative framework.
Another issue on which the Government should focus after the appointment of the Commissioner is the reinforcement of the Agency with additional staff, in order to be able to cope with the additional responsibilities assigned to it.
With the new legal framework, it is possible for the Financial Commissioner's office to confirm the amount due, in case of sale, or contestation of the amount of debt or the cancellation of unfair terms. The advantage of debt confirmation through the Financial Commissioner's office is the speed of resolving any dispute, within strictly defined timeframes, as well as the alignment of incentives for borrowers and mortgage lenders to settle the dispute over the amount of debt out of court, instead of using a legal remedy, i.e. limiting any abuse of the judicial system by the parties involved.
In addition to the above, the Rent for Instalment Scheme was implemented last month. This is the fourth government plan to protect the borrower's primary residence. With the Rent for Instalment Scheme, eligible borrowers will be converted into tenants, since the ownership of their home will be transferred to KEDIPES, their loan will be written off, in addition to the value of the collateral and the state will pay the rent for a period of 14 years, with a repurchase option after five years at a preferential price.
Around 2,500 borrowers are estimated to be eligible. With the above regulations, appointments and plans, the water has now entered the groove to protect those who want their property from sale. Now, no one who really wants to preserve their wealth has an excuse not to use one of the many tools at their disposal.
If the government's new effort falls on deaf ears and potential beneficiaries do not seize the opportunity they are given, creditors should do what they should have done for years. That is, to identify those who deliberately do not repay their loans and take all legal measures against them. With the constant rejection of various plans by some affected parties, it is reasonable to conclude that these are strategic loan defaulters, who have the ability but consciously do not pay their installments. This also helps creditors, who for years have been trying to define a strategic defaulter. The categorisation of borrowers will also clarify creditors' portfolios.
