The House plenum meets today to take a vote on the island’s new foreclosures bill amid protests outside by activists on the protection of borrowers and of primary residences.
The outcome of the vote is still uncertain even though a proposal by opposition centre Diko giving additional powers to the Financial Commissioner seems to be the best compromise solution, according to insiders.
The ongoing debate by opposition MPs is whether to accept President Nicos Anastasiades’ veto or reject it and leave it to the Supreme Court to have the final say.
On Monday, parliament decided to postpone voting on the vetoing by the President of the amended bills that basically slow down the island’s foreclosures process. The bills were tabled some two weeks ago.
Opposition parties are saying that they want to introduce additional safeguards for homeowners with mortgages they are unable to service. As well as to restore the negotiating balance between lenders and borrowers.
Diko’s proposal affords the Financial Commissioner the power to decide whether a bank had complied with the Central Bank of Cyprus’ code of ethics on loan restructuring.
This is one of the issues raised by opposition MPs who claimed borrowers were at the banks’ mercy.
However, if Diko’s proposal does get adopted then further legislation will have to be amended because legal issues arise from the fact that the Central Bank is an independent supervisory and the Commissioner is not. This raises the question why change a bill that in the end will have to be combined with amendments to other laws in order to work.
In addition, no borrower can now go to the Commissioner and ask for mediation if his/her loan is in the hands of a loan management company. Another legal gap that arises is in the Commissioner’s financial threshold since the Central Bank directive refers to loans of €1million. The Commissioner, however, only handles cases involving €350,000 in mortgaged loans that have a primary residence as collateral.
Moreover, the Central Bank believes that a mechanism can be found that will work but also be in line with the island’s obligations towards the European Central Bank and the Single Supervisory Mechanism (SSM).