By Angelos Anastasiou
BANKS have started sending out letters reminding borrowers and guarantors of payments in arrears and informing them of the consequences of non-payment, much to the dismay of borrower-protection groups who fear this might be a precursor to more drastic action despite earlier assurances of sensitivity towards those hit by the crisis.
Speaking on state radio, Stavros Papadouris, head of the Association for the Protection of the Primary Residence, cited the case of one family with three unemployed members who have received a court summons.
“I have the subpoena before me,” Papadouris said. “It was served on September 19 by a Limassol law firm, which is suing a primary-home owner. This is a family with three unemployed members. We have heard all the announcements aimed at unemployed individuals for €10 or €30 a month by the Bank of Cyprus, and I am looking at a subpoena that we will discuss with our legal consultants,” he said.
“I have received at least 30 phone calls over the weekend, mere days after the foreclosures law was passed.”
But the Bank of Cyprus’ head of Retail and Small-to-Medium Business banking, Haris Puangare, argued that letters were a formality, and that borrowers should contact their bankers in order to come to solutions.
“At the Bank of Cyprus, recently we have been observing an increase in those who are able to service their loan but opt not to, in light of the whole debate of what will happen with the [foreclosures] law, who might be exempt, and so on,” he said. “That is why the BoC has resumed the policy of sending out letters to borrowers and guarantors where there are late payments – a practice suspended after the events of March 2013.”
Puangare said the letters are purely informative and not targeted or differentiated in any way, and urged distressed customers to contact the bank in order to find a solution.
“It is a reminder of non-payment, and of the consequences of non-payment,” he said. “At the Bank of Cyprus we are talking about tens of thousands of borrowers, so any action will be an automated one. But it falls to the borrower to say ‘I have a problem, I want to make this arrangement.’ At that point, we will sit with the customer to work out solutions. That is why we ask our customers to contact their personal banker, their branch, to accommodate a solution.”
However, according to Papadouris, one of the homeowners who contacted him requested a meeting with the bank to restructure his loan months ago but was ignored.
“I note that this individual sent a letter requesting a loan restructuring on February 12, but was completely ignored,” he said. “I have this letter too, and it was signed for by a Bank of Cyprus official. And they have the nerve to issue a subpoena.”
Papadouris claimed to have received numerous phone calls over the weekend concerning such matters, alluding to a link between the recently-passed foreclosures legislation and the spike in letters to late payers.
“In another case, again involving a family of unemployed from Nicosia, the bank has declined a restructuring request arguing that the family is non-viable. So, after the fanfare of the €10-a-month schemes for the unemployed, the Bank of Cyprus is basically telling them that it cannot help them while they remain unemployed but will consider doing so once they get a job.”
He was referring to an announcement by the bank several weeks ago saying that unemployed persons could defer their mortgages until they were re-employed, and pay €10 a month to the bank in the meantime. A second offer involved those who had seen a pay cut of 25 per cent or more who could defer their mortgage for 15 months and pay the bank €30 a month in the meantime.
One BoC customer told the Cyprus Mail that when she went to her personal banker to discuss the latter, the bank official had no knowledge of the press release and questioned where it came from, though it was widely published in the media. “She then told me that after the 15-month mortgage suspension, I would end up paying a whopping interest rate and that basically at 50 years of age, I was too old for this,” said the woman. “I then asked her to at least restructure my mortgage slightly for a year or so, she said she would get back to me. That was two weeks ago.”