The House Finance Committee yesterday began discussing proposed amendments to the island’s foreclosures law despite frantic calls by the government and the banking industry that the timing is wrong.
Finance Minister Harris Georgiades urged opposition MPs to delay voting on the proposed changes that could weaken lenders’ ability to recover loans and trigger a chain reaction of adverse side effects.
The five proposals were tabled by centre Diko, the Green party, Solidarity Movement and Citizens’ Alliance Movement.
The Minister pleaded that it was best to wait until the fledgling ‘Estia’ scheme, which provides relief to primary homeowners who cannot meet their obligations, kicked in.
And that some time should be allowed for the scheme’s effectiveness to be assessed before tinkering with the law on foreclosures.
Technocrats from the Central Bank of Cyprus and the Association of Cyprus Banks backed the Minister, warning that international rating firms will immediately downgrade the island’s economy if the foreclosures bill becomes toothless.
They also argued that the European Central Bank will negatively review guarantees on borrowers’ loans, while problems will also arise with forecasts by credit institutions.
The law on foreclosures was amended in 2018 to make it more effective, some four years after it was passed by parliament with changes that essentially rendered it toothless and unable to help banks reduce non-performing loans.
A Central Bank of Cyprus representative told lawmakers that currently in Cyprus NPLs account for 30 per cent of all loans, compared to the eurozone average of 3 per cent.
At the same time, a representative of the banks’ Association said concerns that debtors could be thrown out of their homes appear unfounded. For example, he added, to date Bank of Cyprus has restructured some 28,700 loans. Over the past 12 months, only 921 of these restructurings related to home loans.
In the same time period, the bank foreclosed on 242 properties. Not one of the foreclosed properties was a primary home.
Fifty percent of the foreclosures related to undeveloped plots of land, and the rest were villas and commercial properties.
The Cyprus Chamber of Commerce and Industry as well as the Cyprus Employers Federation (OEB) also expressed their opposition to the proposed amendments.
Read more:
https://in-cyprus.com/banks-stepping-up-foreclosures/
