Finance Minister Harris Georghiades warned that the state has funds to last until the end of November.
The foreclosures bill is an instrument that will allow all lenders, including banks, to foreclose on unpaid mortgages and reduce their exposure to non-performing loans (NPLs), estimated to be worth €4 billion, or almost 25% of GDP.
Interior Minister Socratis Hasikos, so far adamant about passing the controversial bill in its present form, also seems to be ready to make some minor concessions, at least to get enough parliamentary support to prop up his own DISY’s 20 votes with at least eight more.
All parties seem to be united in rejecting the bill if no safeguards are included, such as securing the primary home, especially of low-income families, ensuring that the foreclosures and repossessions will not lead to a market crash in property prices, thus allowing giant portfolio owners to sweep the market at dirt cheap prices, and that the bill must be tied to another one on insolvencies, expected to come into force on January 1, next year.
Ruling DISY has suggested a number of improvements to make it more attractive to the centre-right DIKO, with the hope of securing a House majority, including the single-seat European Party (Evroko).
“To begin with, borrowers already have recourse. Central Bank regulations allow borrowers to try and restructure their loans, which lenders are obliged to consider,” Hasikos said on Tuesday, otherwise, lenders and their executives face harsh fines or even jail sentences. “This is how we expect to drastically reduce the level of NPLs which has become a scorge for our baking sector,” the Minister said.
As regards the foreclosures bill, Hasikos said that there were various stages in the process giving ample rights to borrowers each part of the way, including extended time to seek legal or mediatory recourse and to safeguard their rights.
However, he reiterated what he has been telling political party leaders, including the socialist EDEK and the Greens on Monday, that there is no issue of starting procedures for the foreclosure of primary homes (ie. the owner is proven to be living there permanently) if the revised bill on insolvencies is not passed first. In effect, this means that foreclosure procedures cannot begin any time sooner than next January.
EDEK and Greens party spokesmen said they still had reservations about several provisions in the bill and warned that they would vote against it in its present form.
“The consequences from passing the bill will be graver than a possible non-disbursement of the next tranche,” said EDEK MP Nicos Nicolaides.
Thousands of homeowners and proprietors of small business premises risk losing their properties en masse, further feeding the recession and “brutally impacting” the most vulnerable groups, he added.
EDEK is also asking the government and the Central Bank for detailed data on problematic loans relating to primary residences and small-to-medium sized businesses, loans to developers, loans granted without adequate security, mortgage values, and banks’ exposure to bad debt.
This data, said EDEK, would make it possible to distinguish between viable and non-viable borrowers, in contrast to the government’s proposed legislation which “indiscriminately” lumps all debtors in the same basket.
Meanwhile, about 15 organisations and civil society groups, headed by the pro-communist trade union PEO, held a joint meeting and elected a steering committee, with a joint declaration and a programme of demonstrations to be announced on August 12, leading up to a mass rally later in the month, depending on when the bill will be presented to parliament.
At the same time, Bank of Cyprus CEO John Hourican has stated in separate media interviews that he does not want to see the island’s largest lender become a repossessions company, although consultants have advised that a separate company ought to be set up to handle the portfolio of NPLs, recoveries and troubles mortgages.
He told ‘Kathimerini on Sunday’ that repossessing mortgaged homes is not the bank’s priority, nor will money reaped from home auctions ever be a source of profit for the bank.
“What we aim to do is provide loans to those who can bring in regular payments. We’re not becoming a repossessions company,” he stressed.
Instead, Hourican clarified that the foreclosures legislation affords the bank the opportunity to target debtors taking advantage of legal loopholes in the system, and who are refusing to pay.
Reiterating his commitment to preventing mass sell-offs, the bank’s CEO underlined that protecting vulnerable groups is – and will remain – a key concern.
Ruling DISY, meanwhile, has suggested that the revised land registry valuations, in 2013 prices, be used instead of the private estimates – the rationale being that property prices in early 2013 were around 10% higher than today, thus allowing for higher auction starting prices.
Hasikos and Georgiades are scheduled to continue their exploratory meetings with party leaders, seeing the DIKO leadership on Wednesday and Evroko’s Demetris Syllouris on Thursday.
Next they will meet with diehard opposition forces AKEL and the Citizens Alliance.
Source: Financial Mirror
