Only about 100 fully completed applications have been submitted so far by individuals for the ‘Estia’ mortgage relief scheme, a far cry from the theoretically thousands of interested people, MPs heard on Monday.
Since the application period opened a month ago, just 104 complete application forms have been submitted to banks participating in the scheme.
In addition, 250 incomplete forms were filed, said Michalis Kronides, head of the Association of Cyprus Banks.
The application deadline is November 15.
Duly completed forms are initially screened by the bank where a debtor has a mortgage and then forwarded to the labour ministry which double-checks if the applicant meets income and other criteria for the scheme.
Where the bank considers the loan to be unsustainable or ineligible, the application will be rejected by the ministry; if the bank considers the loan to be eligible, the ministry will verify the eligibility criteria.
To date, not a single application has reached the ministry, legislators heard.
But a labour ministry official said they estimate approximately 7,700 debtors are interested in the debt relief scheme, which is subsidised by the government. The number cited was based on informal queries received by banks.
Lawmakers said the trickle of applications is due to the complexity of the application process. The application form itself is more than 30 pages long, while applicants must gather and append about 40 to 50 different types of documentation – requiring a great deal of time and effort.
But it’s also understood that prospective applicants are wary of disclosing information about other assets or income, which might lead to capital or tax audits.
Chairman of the House finance committee Angelos Votsis said the interest shown so far is disappointing, meaning many homeowners might miss the opportunity to restructure their mortgage debt, leaving them exposed to the risk of repossession.
But he also cautioned debtors not to hold out for an Estia 2.0 scheme, because it was not on the cards.
The MP advised those who believe they can’t afford the two-thirds installment on a rescheduled loan under ‘Estia’, to apply regardless, so that their data is stored and processed by the government.
Normally the programme applies only to loans (mortgages) that were deemed non-performing as at September 30, 2017. Loans designated as non-performing after that date are not eligible.
However Votsis encouraged debtors with loans classed as performing at that date, but which subsequently became non-performing, to likewise file their paperwork anyway.
This was so that the government could keep their records on file, allowing these individuals to be quickly identified in the future should the state come up with another solution for them outside the ‘Estia’ scheme.
‘Estia’ applies to the first mortgage on a residence and covers loans or credit facilities regardless of currency.
If eligible, an applicant’s 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 while the taxpayer (the state) will subsidise one-third of the monthly installments on that rescheduled loan.