Cyprus Mail
Cyprus

Borrowers blame banks for passing on revaluation costs

The Borrowers' Association says that the bank is illegally passing the cost revaluations on to the customers

By Angelos Anastasiou

BANKS have come under heavy fire once again as the Borrowers’ Association accused them of illegally passing property revaluation costs to borrowers and failing to follow the Central Bank’s guidelines on restructuring non-performing loans.

The association and the House Ethics Committee, convened on Tuesday, have received “numerous complaints” regarding to the loan restructuring process followed by banks, focusing on the purported need to revalue mortgaged property that has lost part of its value and the banks’ practice of passing the cost of the revaluation to borrowers.

A circular from the Central Bank of Cyprus sent out on Monday to all banks in Cyprus clarified the revaluation requirements for mortgaged properties, and an opinion presented by the government’s Law Office during Tuesday’s session of the Ethics committee confirmed the Association’s claim that the cost of property revaluation must burden the bank.

The president of the Borrowers’ Association, Costas Melas, expressed his satisfaction at the House’s efforts to involve itself in the problems faced by borrowers, but accused the banks of adopting an antagonistic attitude in the loan restructuring process.

“The Central Bank’s circular clarifies the conditions under which revaluations are required – they are certainly not required in all cases – but what is now certain is that the revaluation cost must be borne by the banks,” he said.

Melas also criticised banks for missing the point of the restructuring efforts, which is to turn non-performing loans into performing ones.

“The Central Bank’s code of conduct was created specifically so that loans can be rendered viable with the banks’ help, but instead the banks are trying to find ways to make the loans unworkable, which is incomprehensible in itself,” he added.

As head of the Borrowers’ Association, Melas has long been a vocal critic of bank practices, speaking out in favour of borrower rights and engaging the competent authorities – like the Central Bank of Cyprus and the House of Representatives – in order to safeguard them.

Michalis Pilikos, head of the employers’ federation OEV, expressed disagreement with Melas’ assertions and defended the banks’ policy of coming down on non-paying borrowers as the only way to lending and lower interest rates.

“I disagree completely with the view that banks wish to repossess properties”, he said.

“My understanding is that they don’t want to enter the property development industry – they want to secure
liquidity so that they can lend again. And, by the way, that is also the only way for interest rates to fall.”

Related Posts

Police arrest man wanted for burglaries

Gina Agapiou

Cyprus News Digest: High blood pressure, hypertension, the silent killer

Rosie Charalambous

Fourth arrest in scammers posing as doctors case

Gina Agapiou

Investigation after weapons and ammunition found

Gina Agapiou

Bank of Cyprus posts €21 mln first-quarter profit

Kyriacos Nicolaou

Cyprus Business Now

Kyriacos Nicolaou

4 comments

Comments are closed.