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Our View: Estia scheme has been a dismal failure

Estia allows households to benefit by having one third of their monthly loan repayment subsidised by the taxpayer

The House finance committee asked the government to extend the deadline for the submission of documentation and data for incomplete applications to the Estia Scheme by 15 days. The current deadline is on June 30 but the Estia deadlines are constantly being pushed back in the hope people that would benefit would show some interest in applying. It seems, however the 30 per cent subsidy of the loan repayment by the state is not considered an attractive enough incentive for people with NPLs on their primary residence.

The figures given to the committee are staggering. Of the total 5,639 applications only 1,204 were completed, at least partially, more than 4,000 contained only the name of the applicant. It gets worse. A little over a half of the partly-completed applications, 673, were forwarded by the banks to the labour ministry, of which 152 were set for approval, 182 rejected, 271 were returned for additional data and 68 found non-viable. When the scheme was first announced the government had said that some 15,000 people would be eligible. How wrong its calculations proved.

The reason for the extension was to give applicants the chance of providing the necessary documentation required, as they were unable to obtain it, because of the lockdown. Now that all government offices were open the loan defaulters would be able to collect the necessary documentation, it was said, in justifying the request for an extension of the deadline.

The political parties, predictably, attributed the low number of applications to an assortment of unconvincing reasons, the main one being the ineffectiveness of the scheme and the very long time being taken by the banks and the ministry to examine the applications. One deputy said the scheme failed because of the strictness and complexity of the criteria. What did deputies expect? The state would subsidise the repayment of bad debts by the debtor just giving a name and address?

The reality is many people are not repaying their housing loans because they believe they can get away with it and the numbers show this. Only 1,204 applications were submitted, some only partly completed. The submission of 4,400 applications with just a name was simply intended to stop repossession procedures in the courts; any foreclosure cases against applicants to Estia had to be suspended.

When the state is offering defaulters to cover 30 per cent of their loan repayment and they do not seize the opportunity, it can only mean on thing – they do not want to pay anything, either because they cannot afford to or because they believe they can get away with it. Then again, they may be expecting an even more attractive scheme. The committee chairman asked on Monday whether there was another scheme to cover all those whose applications had been rejected as unviable. This is the expectation created.

It could be the reason so few applied. They may be hoping for a better scheme with the taxpayer covering 50 or 60 per cent of their repayments.


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