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Parliament rejection of presidential veto unlikely to have teeth

Very few foreclosures have concerned primary residences

Parliament’s rejection on Monday of a presidential veto on a bill aiming to freeze home repossessions until October may prove pointless given that banks have reportedly provided assurances they will halt foreclosures on primary residences for homeowners applying for a government-backed debt relief scheme.

The bill was passed by opposition parties on July 12, ostensibly to protect mortgage holders against lenders. President Nicos Anastasiades vetoed it a week later, sending the bill back to parliament, which in turn voted to reject the veto thus insisting the bill be made into law.

The matter is now expected to end up at the supreme court.

However, prior to the vote in the plenum, Finance Minister Harris Georgiades told MPs that under an agreement between the government and the banks there exists a procedure that shields primary residences from repossession.

He was referring to the Estia debt relief scheme for vulnerable homeowners. Under the scheme, Georgiades said, a foreclosure process is suspended until a person’s application for Estia has been examined.

The minister’s assertion raised the question of what was the point of the bill aiming to freeze repossessions until October.

The Estia scheme is set to go live next month, with the period of applications starting on September 2.

Also on Monday, parliament decided to hold off voting on a second presidential veto, which related to a bill amending foreclosures legislation. The House will be reconvening this coming Friday to vote on this veto.

Likewise introduced by opposition parties, the bill would drag out the foreclosures process. Bankers warn it would make collection of bad loans more difficult and probably result in lenders being required to raise their capital provisions.

It’s understood that postponing a vote on the veto was a last-minute tactical manoeuvre: MPs knew that if they doubled down and rejected the president’s veto, the dispute would end up at the supreme court for adjudication – taking months for a final decision. In the meantime, their bill purporting to help homeowners would be stuck in limbo.

Opposition legislators also sought time until Friday to tweak the contested bill, removing from it any clauses that might give the government ammunition to claim it is unconstitutional.

The Diko party proposed bringing the financial ombudsman into the matter. The ombudsman promised to study the bill and make recommendations by Friday.

Diko rejects the government argument that the amendments to the foreclosures legislation will adversely impact the banking sector, which is in dire need of decreasing its massive stock of non-performing loans.

Rather, it says, the amending bill merely re-establishes a ‘negotiating balance’ between borrowers and banks.

Publicly at least, the debate is about protecting homeowners from profit-driven banks.

But data released earlier this month by the Central Bank of Cyprus show that in practice primary residences are not the banks’ first priority when it comes to repossessions.

Between 2015 and the first quarter of this year, banks overall sold off via auction 444 properties, only two of which were primary residences.

During the same period, 9,221 foreclosure notices were sent out. Of these properties, 444 were actually sold, or 4.8 per cent.

The number of foreclosure notices sent out on primary residences during 2018 were: 35 in the first quarter; 41 in the second quarter; 28 in the third quarter; and 61 in the fourth quarter.

In the last quarter of 2018 there were a total of 187 notices on houses and flats (non-primary residences). And in Q1 2019, 140 notices were sent out for this category of property.

During the first quarter of 2019 – the latest data available – 39 notices were sent out on primary residences.

 



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