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Cyprus

Foreclosures bill reaches new stalemate, EC says Cyprus not compliant

Rival leaders will continue to argue in parliament

By Elias Hazou

PARLIAMENT on Thursday upheld a bill suspending the foreclosures law until the end of the month, despite government appeals to avoid actions that could hurt Cyprus’ credibility.

President Nicos Anastasiades had refused to sign the bill and referred it back to parliament where it was upheld by the opposition parties which introduced it in the first place.

DIKO MP Athina Kyriakidou joined ruling DISY’s 20 lawmakers who sided with Anastasiades. The opposition mustered 32 votes.

The president can now refer the bill to the Supreme Court, though he will probably avoid doing so as there was no time before it expired at the end of the month.

Commenting on the development, Simon O’Connor, spokesman for the European Commission – which is part of the troika of Cyprus’ international lenders – said late on Thursday evening that the foreclosures legislation as it stands does not comply fully with the terms of the island’s bailout.

The European Commission would monitor the situation and remain in touch with Cypriot authorities, he added.

Having effective foreclosures legislation in place was a condition included in the terms of the island’s bailout.

During the first plenary session of the year, AKEL also tabled a law amendment that would have suspended the foreclosures law until the end of June. Likewise, the Greens’ George Perdikis tabled his own amendment suspending foreclosures proceedings until June 29, but only for primary homes.

Both motions were defeated.

AKEL deputy Yiannis Lamaris defended his party’s stance saying that the reasons the president cited for referring the foreclosures suspension bill back to parliament were unconvincing.

He and MPs from other parties argued that, despite government assurances to the contrary, banks are squeezing hundreds of debtors in a bid to repossess properties and recover their loans.

The government has said that as long as the accompanying legal regulations to the core foreclosures legislation – passed last year – are inactive, no repossessions can take place.

But the opposition parties counter that the pending regulations – which the government will submit to the House soon – concern only the final stage of auctions, meaning that in the meantime banks can initiate foreclosures proceedings.

For his part, DIKO leader and MP Nicholas Papadopoulos said that in the absence of a safety net – additional legislation governing bankruptcies – vulnerable borrowers must be protected.

DIKO’s Athina Kyriakidou, who broke ranks with her party, said she was willing to give the government the benefit of the doubt that the regulations activating foreclosures would not be submitted before the so-called insolvency framework is brought to parliament.

The framework is an omnibus bill consisting of five items of legislation regulating personal and corporate bankruptcy, placing viable businesses under examinership, debt forgiveness for low-income persons with debts of less than €5000, and personal repayment schemes for individuals with debts not exceeding €300,000.

Opposition parties moved to suspend the foreclosures law in December, right after international lenders released €350m as part of the island’s €10bn bailout.

And this after they had initially withheld the payment in September following a similar action.

However, the recent move prompted the International Monetary Fund to withhold its share of the tranche, an additional €85m.

The troika of international creditors – the IMF, European Central Bank and European Commission – have said they will not carry out a full review mission of the bailout programme until Cyprus complies fully with its foreclosures obligations.

The opposition has chosen not to heed repeated calls from the president and his finance minister that placing impediments to foreclosures would damage Cyprus’ credibility and make it difficult to borrow from its bailout partners and other potential lenders.

Opposition parties say their motive is to protect home owners and owners of small business premises from having their property repossessed by banks. But according to Central Bank data, primary residences account for less than 15 per cent of loans that are to close to being in default, suggesting that commercial banks will likely not prioritise these loans in their drive to recover bad debt.



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