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Cyprus

MPs vote to delay foreclosures to March 19

By Elias Hazou

WITH the support of ruling DISY, parliament on Thursday passed a law suspending anew the enforcement of foreclosures legislation, this time to March 19.

Voting in favour were the present MPs from DISY, DIKO, EDEK and the European Party, garnering 30 yeas on the House floor. AKEL, the Greens and independent candidate Zacharias Koulias voted against.

The law passed is an amendment on a bill tabled by socialists EDEK, which entailed a blanket freeze on the foreclosures law until April 3. During the plenary, DIKO submitted a verbal amendment on EDEK’s proposal, extending the suspension to March 19 instead.

The current suspension was set to expire on March 2. The reason cited for extending it – again – was to allow time to study and pass the insolvency framework – a set of laws governing personal and corporate bankruptcy – seen as a safety net for distressed borrowers who have put up their homes and businesses as loan collateral.

DISY agreed to go along with the modified EDEK/DIKO proposal, and withdrew a bill they had earlier tabled, which provided for exempting primary residences only from foreclosures until April 3.

Explaining his party’s thinking, DISY leader Averof Neophytou said he hoped that over the next fortnight lawmakers would be able to correct legal errors detected in four of the five insolvency bills.

“We hope this can be achieved by the plenary session of March 19, so that the foreclosures law can also be unblocked,” he said.

DIKO chief Nicolas Papadopoulos urged parliament to sort out the foreclosures/insolvency debacle as soon as possible, warning: “Whenever we pass these laws is irrelevant, the banks are already squeezing debtors.”

It is the fourth time parliament suspended the foreclosures law, which was passed in September last year but has not been enforced because of the entanglements between the government and the opposition, which controls the House.

So far, the President refused to sign off on the suspension laws and has sent them back to parliament.

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

However, the 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.

In a related development, also on Thursday, the House passed a bill suspending the enforcement of a clause in another law which prohibits the sale or transfer of loans to banks not licensed in Cyprus.

Enforcement of the contentious clause has been suspended until March 19.

As it stands, the clause prohibits Cyprus-registered banks from transferring to third parties (other credit institutions or hedge funds) part of, or the entirety of a loan portfolio, unless the third parties are also licensed in Cyprus, or unless the loan is transferred for use outside Cyprus.

Earlier, the Central Bank had warned legislators that the provision violates the free movement of capital and is potentially unconstitutional, as it discriminates against credit institutions not licensed in the Republic.

The clause was an initiative by Giorgos Lillikas’ Citizens Alliance party, who said they wanted to protect borrowers from loans being transferred to predatory hedge funds.

Its suspension is a quick fix, as the relevant provision is to be discussed by the House finance committee next week.

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