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DISY wants changes to foreclosures bill

Land Registry dept

By Stefanos Evripidou

THE government will face demands for changes to the crucial foreclosures bill from an unlikely source, its main backer, the ruling party DISY, it transpired on Friday.

Finance minister Harris Georgiades launched a round of contacts with the political parties to explain the foreclosures bill, starting with the ruling party.

DISY leader Averof Neophytou and close associates held meetings at the Central Bank of Cyprus (CBC) in the afternoon to discuss the banks’ restructuring process, after which they met with Georgiades and Interior minister Socrates Hasikos at party headquarters to exchange views on the controversial repossessions bill. The finance minister will meet with the remaining parties next week.

According to state broadcaster CyBC, DISY wants to table three amendments to the bill. It reportedly wants to include a provision that stipulates that before any foreclosure can take place, there needs to be an assessment that all relevant rules and regulations of the CBC were adhered to. Second, the party reportedly wants to ensure that after a property is repossessed, all demands on the borrower are subsequently eliminated. And lastly, the values of properties to be resold should be based on the state’s own valuations as conducted by the Land Registry for the purposes of collecting immovable property tax.

The draft legislation came about after tough negotiations with the troika. The international lenders reportedly drew a line in the sand on their conclusion, saying they will not stand for further changes that would make it even harder for banks to recover mortgaged properties.

The troika made it abundantly clear that if the bill is not enacted by the end of August, this could put at risk the next tranche of bailout money.

However, opposition to the bill remains fierce with most parties claiming its enforcement will lead to mass foreclosures of properties by banks, leaving thousands homeless.

In a bizarre twist, associations representing borrowers and primary residence owners on Friday seemed to put their weight behind the bill, seeing logic in its provisions where the parties cannot.

So far, all parties, bar DISY, have expressed disagreement with provisions of the bill, while the latter reportedly wants changes to be made before giving its final support.

Asked about the prospect of parties tabling amendments to the bill, government spokesman Nicos Christodoulides said the aim of the meetings with the finance minister was “to inform and exchange views, so as to arrive at a desired outcome for all”.

On August 11, the House Finance and Interior committees will jointly convene in the presence of Georgiades and Hasikos to begin parliamentary discussion on the contested bill.

Earlier in the day, DISY spokesman Prodromos Prodromou called on the parties to stop terrorising the people with tales of mass foreclosures, arguing that people who are solvent but in trouble because of the crisis will not have their properties repossessed.

He said it was the common will of the government and parties to provide a comprehensive mechanism that will not punish borrowers in good faith, and will not harm the economy either.

Opposition AKEL politburo member Stefanos Stefanou insisted that the government agreement with the troika constitutes a catastrophe for the economy. People will lose family homes and remain indebted to banks for the remainder of the debt not covered by the auction of the repossessed property.

EDEKleaderYiannakisOmirousaid his party will reject the bill which will lead to mass foreclosures without any protection for primary residences or the vulnerable groups in society.

DIKO deputy spokesman Athos Antoniades said thebillhasone single target, taking people’s homes through an “express” system.

“It is clear that the target of the bill is the family home and not those who owe 90 per cent of the non-performing loans,” he said.

Meanwhile, the head of the borrowers’ association Costas Melas said he didn’t see a problem with the aim of the bill, noting the protections in place to protect against abuse. “I don’t see a problem, it is a feasible bill,” he said.

“Borrowers are protected by fully maintaining access to the courts for remedies they are entitled to, and believe me, there are many remedies that borrowers are entitled to.”

He also referred to the borrowers’ ability in the bill to use their own valuations of the property.

The main issue of contention was the draft bill’s stipulation that implementation for primary residences would not come into force until January 1, 2015, by which time an insolvency bill is expected to be passed.

Melas argued the bill should specifically refer to the insolvency bill coming into law as a precondition to implementing foreclosures on primary residences.

The primary residences’ association head Stavros Papadouris echoed Melas’ position on when the law should come into force.

“Our big fear is what if the law is passed, but the insolvency law is delayed,” he said.

Papadouris warned, however, that if the bill did not pass, this would allow wily borrowers to wriggle out of their obligations.

“There is a big risk that if we don’t modernise the law, implicitly we open an escape route for the crafty borrower who from 2006 was borrowing with impunity to once again come out clean.”

The property valuers’ association Kikis Athinodorou also rejected the parties’ argument that banks will begin mass foreclosures as a result of the bill, noting that this would create a vicious cycle in the market. His main concern was that bidders in auctions of repossessed properties will wait for the asking price to drop to 50 per cent of the valuation.

Head of the land developers’ association Pantelis Leptos said there was room for “significant improvement” in the draft bill, which they were still studying and needed more time.

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