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Sale price a thorn in foreclosure bill discussions

While the final touches are yet unspecified, the foreclosures bill was expected to make its way to the government’s legal services for review on Tuesday, ahead of its submission to the cabinet for approval.

According to sources cited by the Cyprus News Agency, the bill had not yet been finalised as of Tuesday morning, despite a Monday marathon session attended by Finance minister Harris Georgiades, Interior minister Sokratis Hasikos and the Troika mission heads that yielded some consensus.

The bone of contention appeared to be determining the price at which a foreclosed property may be sold, in order to prevent fire sales.

The government’s aim is to maintain the secured price, meaning the minimum amount that can be accepted as an initial offer on a property, relatively high even after a public auction has failed to attract bidders.

The same sources claimed that the bill allows lenders a three-month window to resort to the open market in order to sell a foreclosed property at a significantly reduced selling price, after the initial public auction fails to procure buyer interest.

But the clause may unintentionally encourage abuse by lenders, who may collude with potential bidders in order to secure a heavily discounted price.

Additionally, in case a property is sold at a price much lower than its original value, the mortgagor may remain unable to pay off the remaining mortgage, resulting in the loss of property and significant debt burden.

This would also further depress property values.

The government, the CNA’s sources claimed, has attempted to insert clauses offering adequate protection from these risks, but was met with resistance from the Troika.

Deliberations will continue throughout the day in order to agree on the final provisions of the bill, which needs to be approved by the Council of Ministers on Wednesday so that it can be forwarded to the House for review and put to a plenum vote by August end.

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