articles | 26 August 2014

Banks to target big borrowers first in foreclosures bill

Banks will not foreclose on homes belonging to vulnerable groups, the bank association said recently, as it sought to allay concerns ahead of a vote on a foreclosures bill at the end of this week.

Speaking after a meeting with President Nicos Anastasiades on Monday morning, chairman of the bank association Giorgos Georgiou said they will convene in the afternoon to decide on certain issues relating to the bill that will be positive for bank customers.

“Commercial banks have no intention to foreclose on the homes of vulnerable groups. There should not be such a concern,” Georgiou told reporters.

Anastasiades saw the chairmen and CEOs of commercial banks and co-operatives in the presence of the ministers of finance and interior.

Georgiou was echoed by Bank of Cyprus chairman Christis Hassapis who described the bill as an exceptionally useful and effective legal framework.

“All countries in the world must have effective legislation. There are manyborrowers who strategically do not pay,” he said. “The legislation will force them to come and pay.”

Current legislation makes it next to impossible for banks to repossess mortgaged properties.

Procedures are way too slow often taking over 10 years. The proposed legislation speeds up the process mainly by removing the land registry from the picture and allowing private auctions.

This has raised concerns among opposition parties who warned they will reject the bill if it was not improved.

Hassapis said his bank’s priority would be to restructure all viable loans.

“Rest assured that Bank of Cyprus will only move to foreclose only after exhausting all means at its disposal,” he told reporters.

He said it was logical that lenders would go after large borrowers first before moving onto smaller ones.

“BoC’s intention is to look at large borrowers first. Small borrowers have nothing to fear,” he added. “We will start with the millionaires and work our way down.”

The bank has already announced various schemes for small borrowers and more were expected on Monday or Tuesday, Hassapis said.

BoC has a scheme for unemployed individuals that allows them to pay €5 per month for three years.

Businesses who saw their turnover reduced by over 25% can also apply for help.

Source: Cyprus Mail

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