By Andonis Vassiliades
I am returning to the matter of BoC and non-performing loans by developers.
In a recent editorial in the Sunday Mail‘BoC can’t afford to hold on to assets until a better day’ you continue in the same vein without acknowledging the sad truth about non-performing loans as I pointed it out to you in my previous letter.
You write: ‘BoC is owed many hundreds of millions by big companies, many of the developers…It could either start selling off the assets…used as collateral…or risk going bankrupt. It is a no-brainer really.’
Exactly. It is a no-brainer. If you continue to simplify matters and ignore warnings that you are barking up the wrong tree. If you read my letter of June 26, you may see things with a new perspective.
Behind each developer not serving his/her loans there are many thousands of purchasers who paid for the full purchase price but their homes remain the property of the developers because title deeds have not been transferred in the purchasers’ names.
As such, many of those properties which act as collateral and which you wish to see sold off by the bank constitute in fact a legal and social minefield. They are, on paper, the property of developers but in real terms they belong to the purchasers but for the lack of title deeds. Any sell-off will thus penalise by and large the purchasers, not the developers.
I am not arguing that the bank should not foreclose but before such foreclosure, there are serious legal, social and socio-political as well as financial matters to consider before rushing to implement a sell-off of properties.
This matter is a complex web of interlocking events and practices and needs to be understood and cleared up first before we create new situations which cannot thereafter be resolved.
All things being equal in the so-called, as you put it, “properly functioning economy” foreclosure is an economics principle. But in this case not all things are equal. It is one thing to make a point, as you have done which tries to get politicians and bankers and other parties to stop watching their navels and finally proceed to do something to protect the interests of the economy in general and those of BoC in particular, but it is another to ignore the fact that there is a dark side to your argument that needs to be acknowledged and better still enlightened.
Make the call for action by BoC but do also point out that it will not be an easy task given the consequences that may befall on purchasers and what could be at stake if these people, having paid their money, they may now be told they have lost it and in the worst scenario be ejected from their own homes.
Thank you for listening.
Professor Dr. Andonis Vassiliades, Larnaca