FORECLOSURES - THE PRESIDENT REJECTED NINE OF THE TEN LAW PROPOSALS PASSED BY PARLIAMENT - Filenews 22/4 by Eleftheria Paizanou
The President of the Republic lit red on nine of the twelve pieces of legislation approved by the Parliament in the parody session of the Plenary Session of the Parliament on April 6, in relation to foreclosures, the insolvency framework and guarantors.
According to information from "F", President Christodoulidis referred to the Parliament five legislative regulations based on an equal number of law proposals of the parties, while he also proceeded to refer four laws to the Supreme Court, also after law proposals by MPs. The majority in Parliament knew that the proposals were legally and constitutionally flawed.
At the same time, the green light was given for the two government bills approved by the Parliament, in relation to the debt confirmation mechanism, provided by the Financial Commissioner, for debt restructuring. The proposal for a law will also come into force, whereby when a property goes under the hammer, it will not be sold below 50% of its market value.
The decisions of the Presidency were taken at the end of the deadline, due to the complexity and distortions in the legislative regulations. The Legal Service identified in the nine pieces of legislation a conflict with the Constitution, legal technical errors, error or incomplete scope, issues of retroactivity as in some cases it found that some regulations conflict or overlap with other legislations.
The referrals
"F" reveals the five referrals that will be sent to Parliament today:
–Proposal for a law on the Court submitted by DIKO. The regulation enables the District Judges to hear cases of a financial nature and disputes between the borrower/guarantor/security provider and the creditor, whether this dispute concerns a credit facility, debit balance, unfair terms, or any other issue and/or dispute arising from the contract concluded between the parties, to issue an order setting aside a notice of sale (type IA).
The mortgagee may request that the mortgage foreclosure notice (Type 'IA') be set aside within forty-five days of receiving the notice and the court is entitled to issue an order setting aside the notice. After 12 months, the mortgage creditor is entitled to proceed with a new notice, unless the Court decides otherwise to set aside the notice due to the fact that there are special reasons and provided that the borrower does not show bad faith.
– Proposal for an Ecologists Law on the Insolvency of Natural Persons (Personal Repayment Plans and Debt Discharge Decree). It provides for the removal of distortions that create artificial obstacles for insolvent persons to be included in the framework. They aim to remove the unbalanced position of power on creditors.
-A proposal for a law on the Liberalization of the Interest Rate, which was submitted by AKEL, DIKO and DIPA. Banks are prohibited from charging additional interest in the event that the amount of credit facility due, including interest, amounts to twice the original debt.
–Proposal for a law of ELAM concerning the law on Credit Agreements for Consumers in relation to Real Estate intended for Residence. The arrangement prohibits a licensed credit institution, credit acquiring company and credit facility manager from requiring additional collateral from the borrower, when the loan amount is oversubscribed by the mortgage of the property.
– A proposal for a law of AKEL and Ecologists that amends the law on Transfer and Mortgage, with which debtors will have access to justice for unfair clauses and for the amount of the debt. As "F" is informed, the Government found that with this regulation there is a risk that financial stability will be negatively affected and with serious repercussions on public finances. We were duly told that there is a risk of up to €100 million cash flow annually, since it carries the risk of creating a culture of non-repayment of loans. At the same time, it will delay the adjudication of cases in the courts, causing opposite results for borrowers, while it may act abusively to delay the foreclosure process with wider consequences for the banking sector. There is also the risk of a negative rating by the rating agencies.
References to the Court
The four pieces of legislation that have been referred to the Supreme Court, according to the findings of the Legal Service, clearly contain unconstitutional provisions and violate essential articles of the Constitution. The proposals are as follows:
- -Proposal of DISY, EDEK, DIPA and independent parliamentarians which provides that in the event that a mortgaged property that was collateral in a loan is sold through auction or recovered by a mortgage lender, the guarantee provided by the guarantors of the loan is limited and does not exceed the amount of the original loan.
–DIKO proposal which ensures that the mortgage lender is obliged to exhaust both its ability to sell all collateral and to secure a court decision against the primary debtor, before turning to and taking any measures against the guarantor.
– Proposal for a law by AKEL, DIKO and DIPA which provides that after the sale of a mortgaged property, the product collected from the sale or auction does not cover the amount of the mortgage debt, plus interest, the balance of the debt to be written off.
–Proposal for a DIPA law suspending until the end of the year the procedures for the sale of a main residence worth €350,000.
The laws signed
The only law proposal signed by President Christodoulides comes from the Ecologists and provides for the maintenance of the obligation so that the auction price cannot be set below 50% of the market value of the property.
The two bills of the Government concerning the debt confirmation mechanism were also signed. Based on the legislation, the Commissioner's decisions up to €20,000 will be binding. for complaints against financial companies, which, in turn, will be able to appeal to Justice even for the substance of the decision. In addition, borrowers will be able to apply to the Financial Commissioner for confirmation of the debt, when they receive the "I" type letter, instead of the "IA" type letter.
Race from the Parliament and confusion
The parliament will have to make its decisions in less than 24 hours. Tomorrow, Thursday morning, the members of the Parliamentary Committee on Finance will convene extraordinarily to further handle the legislation, while later the self-dissolution of the Parliament is expected for the parliamentary elections in May.
In addition to the large number of referrals and the complexity of the legislation, in case the parties end up in a dead end, the Plenary Session may have to convene extraordinarily even after its self-dissolution.
Under the rules, Parliament can convene due to extraordinary circumstances. Also, the existing Parliament can convene until the new Parliament takes office. The issue was discussed extensively during the meeting of the Chiefs. Due to the confusion in the interpretation as some believe that referrals are not considered an extraordinary event, the Parliament asked for an opinion from a lawyer Achilleas Emilianidis. In fact, there were also opinions that in case the Parliament did not convene for the referrals after its self-dissolution, then the referrals were accepted and the legislation was in force.
A competent source told "F" that this is not the case, as in the event that the Parliament does not convene then the law referred back is not in force, that is, it will not be implemented.
