NEW GOVERNMENT PROPOSAL FOR DEBTS AND FORECLOSURES - Filenews 8/3 by Eleftheria Paizanou
The Government will respond tomorrow with a new formula – proposal to the 26 party proposals that promote a change in the legal framework for foreclosures. According to information from "F", a new mechanism is being promoted by the Ministry of Finance to verify the borrower's debt but also to determine the method of repayment, so that the decision is not up to the creditors alone.
Essentially, with the government's plans, the existing procedures of the Financial Out-of-Court Dispute Resolution Body are strengthened, insolvency counsellors are also involved in the process and, at the same time, borrowers gain additional time to use the tools at their disposal. Basically, additional opportunities will be given to borrowers to protect their primary residence. At the same time, the divestiture process is indirectly slowing down.
As "F" is informed, the proposal elaborated by the technocrats of the Ministry of Finance moves on three levels.
Commissioner's decisions are binding
In particular, the law of the Agency will be amended, so that the decisions taken by the Financial Commissioner on complaints concerning loan overcharges will be binding.
It will mainly concern financial differences for amounts up to €20,000. As we are informed, the limit of €20,000 has been set, as 70% of cases of over-indebtedness in loan agreements are covered.
Insolvency counsellors are also in the game
At the same time, insolvency counsellors will be involved in the process, who will prepare a repayment plan, with which the borrower will also consent, in order to facilitate the repayment of the debt.
Practically, after the determination of the debt by the Financial Commissioner, the insolvency advisors will come up with a settlement framework based on the data of each case. Specifically, after there is a conclusion on the amount of the debt, the insolvency counsellors will prepare a repayment plan, with which both parties, i.e. creditors and borrowers, will be asked to agree. Once there is a position of the two parties involved, the future of the mortgage sale process will depend.
In the Type I letter to the Commissioner
The third stage provides that upon receipt of the type I notification, which essentially activates the foreclosure process, the borrower will be able to contact the Financial Commissioner to verify the amount of the debt, the sale and to find a settlement framework. Today the borrower can contact the Commissioner after receiving the next type IA notification. With the new process being promoted, borrowers will essentially gain time to settle the amount of debt and foreclosure. Today, under the legal framework for foreclosures, upon receipt of the Type I notice, the borrower is informed of the amount of the debt and that the property will be put up for auction. Specifically, notice I (letter) is sent together with an account statement of the mortgage debt, interest and all costs and the mortgage debtor is required to pay the amount due within 45 days from the day of service. In fact, if the amount of the debt is not repaid, the lender can exercise the right to sell the mortgaged property. If the debtor does not comply with the Type I Notice, the second Type Ia Notice follows, notifying that the property is to be sold by auction. This notice must be served at least 30 days before the specified date and time of sale. The Type IA letter paves the way for the auction. Today the borrower can contact the Commissioner after receiving the type Ia letter. With the new government proposal, the borrower will be able to contact the Out-of-Court Dispute Resolution Body upon receipt of the type I notification.
It is unknown if they will make it
The proposal is expected to be presented tomorrow to the members of the parliamentary Committee on Finance by a technocrat of the Ministry of Finance, as the Minister of Finance Makis Keravnos will be absent in Brussels, where he will chair the ECOFIN Council.
The Ministry of Finance believes that the new formula will address the problem of foreclosures. In fact, relevant bills have been prepared for this purpose, which will soon be taken to the Legal Service for legal review.
What has not been clarified, however, is whether, due to the suffocating time limits, the ministry will have time to submit them to the Parliament before its self-dissolution in April. It is worth noting that some of the provisions of the government bill are included in some of the party law proposals.
