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Cyprus

Foreclosures saga enters home stretch

The marathon joint session of the House finance and interior committees failed to produce consensus yesterday

By Angelos Anastasiou

THE saga of the government’s controversial foreclosures bill finally reaches the home stretch today with all outcomes on the table as political parties kept their cards close to their vests yesterday’s final deliberations.

Yet another marathon joint session of the House finance and interior committees failed to produce consensus yesterday, after six hours of discussion.

Despite the session being attended by Finance Minister Harris Georgiades, Interior Minister Socratis Hasikos, Attorney-general Costas Clerides, Governor of the Central Bank of Cyprus (CBC) Chrystalla Georghadji and a host of technocrats whose job it was to answer deputies’ questions and clarify obscure points, the only solid outcome was that only five of the 10 bills approved by the cabinet on Thursday would be put to a plenary vote at todays extraordinary House session.

Among the five bills that made it out of committee was the bone of contention – the foreclosures bill – in the form that was agreed with the Troika, which deemed its voting into law a “prior action” to the release of the next tranche of financial aid to Cyprus.

The second bill to be put to a vote eliminates abusive charges by banks and includes a ban on excessive loan restructuring fees and a cap on late-payment interest at 2 per cent.

Another bill green-lit by the committees regulates the sale of loan portfolios, which will be allowed only to legal persons licensed by the CBC and credit institutions or funds licensed to operate on the island.

The fourth bill to be voted on expands borrowers’ right of legal assistance in court proceedings relating to foreclosures.

The fifth, and final, bill obliges the Central Bank of Cyprus to inform the House of developments in loan restructuring on a quarterly basis.

According to finance committee chairman, DIKO leader, Nicolas Papadopoulos, the remaining five bills will be brought before the House plenum at a later date.

Ruling DISY stated its intention to vote in favour of the government-approved bills only, suggesting it would vote against any amendment that has not been given the nod by the Troika.

“The government’s amendments create a satisfactory, if imperfect, bill,” said DISY deputy Andreas Kyprianou. “We don’t necessarily disagree with additional amendments, except for the fact that they have been met with our lenders’ disapproval.”

AKEL kept its cards closed, suggesting it might vote in favour of some bills, depending on whether they reflect the party’s earlier proposals.

“After we have reviewed them, it would be paradoxical for us to vote against bills that contain our own proposals,” said the party’s spokesman Aristos Damianou.

DIKO’s spokeswoman Christiana Erotokritou said the insolvency framework is a necessary prerequisite to the implementation of the foreclosures bill.

“This bill cannot pass without the existence of a full framework governing insolvency at the same time, as in every other country,” she said. “This impasse can only be resolved by both bills being implemented simultaneously.”

This position was echoed by DIKO’s Papadopoulos, who said the party will insist on linking the foreclosures bill with the implementation of the insolvency framework – an endeavour explicitly denied by the Troika earlier this week.

“It is our intention to table a proposal that renders implementation of the foreclosures bill conditional on implementation of the insolvency framework,” he said.

Upon conclusion of the joint committee session, deputies headed back to their party headquarters in order to prepare amendments to be attached in today’s plenary session.

One striking example is DISY’s intention to table a ‘decision plan’, which is equivalent to a law, stipulating that the government must submit the insolvency framework for House approval by January 1, 2015. The insolvency framework, a set of bills complementary to the foreclosures legislation, will be designed to balance borrowers’ rights with their obligations to lenders, offering them protection from foreclosure under certain circumstances. According to Cyprus’ economic adjustment programme, it is scheduled to be put to a vote by the House by the end of 2014.

A similar proposal will be prepared by DIKO, which will suspend implementation of the foreclosures law as of January 1, 2015, if the insolvency framework has not been tabled by then.

But with the exception of DISY, all parties said they would vote in favour of an amendment, prepared jointly by AKEL and EDEK, exempting primary residences worth up to €350,000, as well as small-business premises, from foreclosure if the debtor can demonstrate that his inability to repay the mortgage was the result of the current economic crisis. The Troika has explicitly expressed its opposition to such a clause as it would render the foreclosures bill effectively toothless.

Other proposals include DIKO’s bid to bestow the abusive charges ban with retroactive effect, and EVROKO’s suggestion to relieve guarantors of any obligations relating to loans covered by foreclosed properties.

Political parties deliberated feverishly late into the night, ahead of today’s meeting of party leaders at 9.30 am.
The House plenary session has been scheduled for 10.30 am.

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