The mortgage-relief scheme Estia for struggling home owners was officially launched on Monday with the opening of applications for the scheme which will be accepted until November 15.
Completed applications can only be submitted to the bank or credit acquiring company with which the applicant has credit facilities.
The banks and companies participating in the scheme are the Bank of Cyprus, the Hellenic Bank, the Cyprus Asset Management Company (Kedipes), Alpha Bank, Astrobank, Eurobank, the National Bank of Greece and Gordian Holdings.
The stated purpose of Estia is to assist, support and protect vulnerable households who have mortgaged their primary residences houses for their loans and at the same time reduce the high number of bad debts.
It applies to loans (mortgages) that were deemed non-performing on September 30, 2017. Loans designated as non-performing after that date are not eligible. The primary residence which is mortgaged must have a maximum market value of up to €350,000.
The Estia scheme applies to the first mortgage on a residence, and covers loans or credit facilities regardless of currency.
Total household income of the applicant must not exceed the following: €60,000 for a family with at least four dependents; €55,000 for a family with three dependents; €50,000 for a family with two dependents; €45,000 with one dependent; €35,000 for a couple with no children, and €20,000 for a single-member household.
The Estia criteria will also apply to single-parent families.
An applicant’s other net assets in 2016, 2017, and 2018, must not exceed 80 per cent of the market value of the main residence after its evaluation.
In any case they should not exceed €250,000.
Any cash or deposits exceeding €10,000, or 20 per cent of the rest of the applicant’s net assets, whichever is higher, and which are not used to secure any other loans, must be paid towards the non-performing facility before the restructuring procedure.
Other terms and conditions also apply.
The loans will be written down to the market value of the primary residence and then the borrower will have to pay two-thirds of the rescheduled loan every month and the taxpayer (the state) is going to subsidise one-third of the monthly instalments on that rescheduled loan.
Borrowers who have not yet done so should ask the bank for the details of their loan in order to fill out the application correctly. Those who feel they do not have the time to appoint their own evaluator will also need the bank’s assessment as to the market value of the home.
The bank will then check whether the borrower has the ability to repay the loan, that is the loan is viable, as well as other eligibility criteria, such as the borrower’s income and assets, and will conduct a preliminary assessment of the application, which will then be sent to the labour ministry.
If the bank considers the loan to be unsustainable, the application will be rejected by the ministry, and if the bank considers the loan to be eligible, the ministry will verify the eligibility criteria.
The banks have until November 29 to complete their end of the process and the ministry until March 2020.