articles | 17 August 2014

Efforts continue to pass foreclosures bill

The Finance Ministry is trying to prepare legislation to complement a controversial bill on foreclosures in a bid to succeed in getting it approved by parliament where it is opposed by the majority of parties.

Opposition parties, including former government partner DIKO, said they would reject the bill in its current form but a glimmer of hope appeared on Tuesday, the second day of discussions in parliament.

“It transpired that there can be common ground and it remains for the government to bring this additional legislation to allay certain concerns,” the Cyprus News Agency said, quoting an unspecified source. The government will now try to prepare bills on the operation of the insolvency councillor together with provisions to protect homes up to €350,000 pending the financial ombudsman’s mediation. The ministry is also expected to legislate on the Central Bank code concerning delays.

Some sort of agreement appears to exist over the bills, especially between ruling DISY and DIKO, the source said.

The Central Bank is also in the final stages of preparing a bill regarding the terms contained in loan contracts. DISY was also preparing a proposal, which will limit interest on arrears imposed by banks, and unilateral rate increases on loans.

On Tuesday, both the Central Bank governor and the finance minister warned MPs of the dire effects the rejection of the bill would have, on banks and the economy. 
The governor said the value of the mortgaged loans in the upcoming stress tests would be zero if the bill was not passed, meaning Cypriot banks would need more capital.

Approval of the bill is necessary for the release of the next tranche of bailout funds. The bills would have to be approved by internationallenders who are not expected to raise any objections if the philosophy of the foreclosures bill remained unchanged. The bill basically expedites repossession of a mortgaged property, which under the current system could take a decade or more. It provides for private auctions conducted by creditors instead of the land registry, the main reason for the delays.

Opposition parties warned of mass foreclosures and initially rejected the bill but DIKO at least appears to have been persuaded on condition that the government includes more safeguards for primary residences.

Source: Cyprus Mail

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