Borrowers and loan guarantors will have triple benefits and shielding, through the six new laws on foreclosures.
In particular, on the one hand, the institution of the Financial Commissioner for the verification of borrowers' debt is strengthened and, at the same time, the right of debtors to appeal to Justice is strengthened.
Also, the insolvency framework is strengthened, while, before the property is taken to auction, safeguards are put in place for its value, as well as restrictions on additional collateral.
The common denominator of the legislative regulations is the slowing down of foreclosure procedures, the protection of mortgaged real estate and especially the main residence, as well as the freezing of auctions for up to a year.
Coding a new framework
"F" codified the changes that occurred, the benefits that arise, as well as the additional weapons given to both borrowers and guarantors. Now, those affected have additional options to protect their mortgaged properties, either through the Agency's out-of-court dispute resolution process or through the courts.
The suspension of auctions
In detail, with the strengthening of access to Justice, through the DIKO law proposal, the foreclosures will be frozen for 12 months, and perhaps longer, until the court makes the final decision. In fact, through the new law, borrowers and guarantors for mortgage loan disputes are protected.
Specifically, as soon as the debtor receives the "IA" press notice, which will inform him that the procedures for the mortgage property to go under the hammer begin, he should apply to the District Court within 45 days, requesting the issuance of a decision to set aside the notice. This automatically entails a freeze on divestment procedures.
Along the way, once a decision is made to set aside the notice, which is expected to be issued soon, the hearing of the merits of the case will follow, which will concern either unfair clauses or the debit balance, etc. The Court will have to give its judgment within 12 months or within a different timeframe if it so provides. During the trial of the merits of the case, all auction procedures will stop.
The legislation concerns mortgaged homes that are collateral for a credit facility, but it is not mentioned whether they are only primary residences. Also, there is no mention of the value of the property.
The appeal to the Commissioner
For affected parties wishing to resolve financial disputes out of court, they will be able to use the debt confirmation mechanism, provided by the Financial Commissioner, for its restructuring.
The Commissioner's decisions will be binding up to €20,000 for complaints against financial companies, such as banks, credit acquiring companies, insurance companies, etc., which, in turn, will be able to appeal to Justice even for the substance of the decision.
It is worth noting that, in the event that the two parties do not reach an agreement based on the decision of the Financial Commissioner, they will be able to turn to an insolvency adviser. During this process, foreclosures are suspended for a period of 60 days.
Also, the periods for the different schedules are changing and increasing, while borrowers will be able to contact the Commissioner earlier, after receiving the "IA" press notification. It is noted that through the Commissioner's out-of-court procedure, but also the change in the schedules, the law on auctions will be frozen for a period of four months.
The new procedure at the Out-of-Court Dispute Resolution Body will begin on June 1, 2026 and for this purpose, information material will be forwarded to debtors. However, in all cases of suspension of the law on foreclosures with both procedures, the interest on the loans continues to run.
The insolvency framework
The other three legislative regulations, which are the product of party proposals, will be able to operate both before and after the sale process. For example, with the legislation that came from the Ecologists, the obligation is maintained so that the auction price cannot be set below 50% of the market value of the property.
With the other proposal of the Ecologists, on the Insolvency of Natural Persons, Personal Repayment Plans and Debt Discharge Decree, the position of debtors is strengthened and distortions are removed. In addition, for those insolvent persons who join the plans, the value of the main residence increases to €400,000.
Regarding the new legislation that came from ELAM, creditors are prohibited from demanding additional collateral from borrowers, when the mortgage of the property secured by the mortgage, combined with the creditworthiness, exceeds the amount of the loan.
Half of the laws in the Supreme Court
On April 6, the Parliament had approved a total of 12 pieces of legislation amending the laws on foreclosures, guarantors and the insolvency framework. Of these, after passing through a thousand thousand waves, six are applied. And this is because the rest were deemed unconstitutional and the President of the Republic proceeded to report to the Supreme Court.
In detail, three of the twelve pieces of legislation were published, after their approval, in the Official Gazette of the Republic. They concerned the two government bills, as well as the proposal for a law by the Ecologists, according to which the auction price cannot be set below 50% of the market value of the property.
Three other party proposals were published after the acceptance of the referral of the laws, after the required amendments had been made. Four pieces of legislation were brought directly to the Court, while two others had the same fate after they were referred back to Parliament.
Constitutional hurdles
The legislation referred to the Supreme Court provides, among other things, for limiting the liability of guarantors, so that it does not exceed the initial loan amount in the event of sale or recovery of mortgaged property.
They also include an obligation for the mortgage lender to exhaust all remedies against the primary debtor before turning against the guarantors, as well as a write-off of the debt balance after the sale, if the proceeds do not cover the entire loan and interest.
The legislation also includes the suspension of foreclosures of primary residences worth up to €350,000 until the end of the year. Reference was also made to the arrangement by which debtors would have access to Justice for unfair clauses and for the amount of the debt.
The Court will also provide a solution to the proposal prohibiting banks from charging additional interest in the event that the amount of credit facility due, including interest, amounts to twice the original debt.
