Cyprus Mail
Cyprus

Compromise creeps in to foreclosures debate

DISY's Averof Neophytou

By Elias Hazou

A bill drafted by ruling DISY – exempting primary residences from repossession until April 3- will this week be put to the vote at the plenum.

A senior government official – perhaps the finance minister – is also expected to issue a statement affirming the administration’s support for the bill – thus satisfying the opposition’s demand for government assurances that primary residences will temporarily be left untouched.

In exchange, the other parties will agree to stop introducing bills suspending in its entirety foreclosures legislation, something that has put Cyprus in hot water with its international creditors.

A blanket suspension on new, tougher foreclosure legislation was voted by opposition parties in mid-December 2014, and renewed in January until March 2.

The President refused to sign off on the latest suspension law and sent it back to parliament, which last week stuck to its guns and upheld it.

Technically, however, the suspension law is not in effect, as it has not been published in the government gazette.

Therefore, whereas the foreclosures legislation does hold, it is currently unenforceable – because the applicable ordinances have yet to be passed.

The foreclosures law was passed as far back as September 2014, but has not been enforced since because of the entanglements between the government and the opposition, which controls the House.

Also at the plenum this Thursday the House will be voting on four of the five bills comprising the so-called insolvency framework – a set of laws governing personal and corporate bankruptcy.

That will get the ball rolling, as up until now opposition parties had threatened to keep blocking foreclosures legislation until the entire insolvency framework were enacted simultaneously.

The fifth and last insolvency bill – which includes the treatment of guarantors after a borrower has declared bankruptcy – will be forwarded to the cabinet on March 3, and then to parliament the following day.

On the same day, March 4, it’s understood the government intends to bring to parliament the ordinances relating to the core foreclosures law.

Should this scenario pan out, foreclosures in general will be enforceable sometime after March 4, though primary residences would be exempted (under DISY’s bill) until April 3.

DISY leader Averof Neophytou on Tuesday welcomed the more constructive approach from DIKO, which last week softened its stance, indicating they would consent to allowing implementation of tougher foreclosures legislation if the government committed to exempting primary residences for an extra month.

Speaking to the state broadcaster, Neophytou explained that the temporary exclusion of primary residences from repossession would relate not just to mortgages.

“For example, where someone has taken out a business loan by putting up their primary house as collateral, this property will also be exempted from foreclosure,” he said.

And according to DISY’s proposal, this was irrespective of the property’s value.

The DISY leader criticised the troika of lenders for the foreclosures debacle, saying the creditors have for a month been holding up the fifth insolvency bill.
The troika objected to the initial government draft of that bill, which stipulated letting off the hook guarantors of bad debt. The government has since revised the document.

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