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Failure of mortgage relief scheme a ‘negative development’

One of the bills relate to suspension of loan repayments, including mortgages, for nine months

The lack of interest by stricken borrowers in the Estia mortgage-relief scheme is a negative development for the state-owned Cyprus Asset Management Company (Kedipes), officials said on Wednesday, after just a small fraction of the 7,000 who were eligible have applied.

Kedipes acting CEO Stavros Iacovou said over 7,000 borrowers were eligible in the Estia scheme, representing some €1.3bn but until five days ago, only 755 applications worth about €148m were received.

Speaking at a news conference, Iacovou said: “This is a negative development for Kedipes because a large chunk of our portfolio has remained inactive for quite a long time and time and revenues have been lost.”

Kedipes was established as a 100 per cent subsidiary of the shuttered state-owned Co-op bank to manage the non-performing loans (NPLs), real estate and other assets amounting to €8.2bn that were not part of the transfer to Hellenic Bank, among which were NPLs amounting to €7.4bn.

Iacovou said efforts to find solutions with the borrowers who have not applied for Estia will continue.

He struck a note of caution however, that proposed solutions relating to primary residences outside Estia will not be as favourable or better than inside the scheme.

They will recognise the right of every citizen to housing but not necessarily keeping ownership of the property.

Some thoughts include exchanging a large house with a smaller one, and lease-to- own agreements.

Foreclosure procedures will be applied in the cases of strategic defaulters, he said.

According to Iacovou, Kedipes, through asset management company Altamira, has restructured loans or repossessed properties worth around €307m in the third quarter of the year, down from €376m in the previous quarter.

Since its creation, Kedipes has resolved loans worth some €861m, or 11.7 per cent of the initial balance.

Iacovou said the flow was satisfactory but he conceded that things will get tougher with time.

“Certainly, the portfolio is expected to gradually become tougher, but I think we will succeed in remaining within the targets we have set,” he said.

Meanwhile, Hellenic Bank is demanding close to €66m from Kedipes as part of the Co-op takeover deal in 2018.

The government had granted Hellenic guarantees worth €2.6bn for possible losses in the loan portfolio taken over by the lender.

The head of financial administration, Lambros Papalambrianou, said Kedipes has informed Hellenic that it could not confirm the demand and two sides will probably end up before a jointly appointed international arbitrator to decide on the matter.

 

 



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