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CBC warns about suspending foreclosures

The Central Bank (CBC) warned Thursday suspending foreclosures could disrupt the financial system because banks would require additional capital to provide for bad debts.

The warning was made during discussion of a number of proposals tabled by opposition parties that provide for a suspension of foreclosures until the end of the year citing the pandemic.

A CBC representative told the House finance committee that delayed repayment of loans translated into raised provisions for banks.

“The supervisor in Frankfurt (European Central Bank) expects increased provisions for loans showing bid delay,” the representative said. “This will disrupt the financial system, something we experienced with the cooperative bank in 2018.”

Of loans that have a primary residence worth up to €350,000 as collateral, 80.6 per cent show delays of more than 180 days, MPs heard. Of that, 34 per cent have late payments of between one and five years, 31 per cent between five and 10 years, and 15.6 per cent over 10 years.

The bank association reiterated that the upcoming foreclosures did not include primary residencies worth up to €350,000.

Director at the association, Michalis Kronides, said 800 online and 562 physical auctions were planned, involving 268 holiday homes, expensive properties that are rented, 106 commercial properties, 117 plots, and 1,071 fields.

“Any temporary suspension won’t be essentially helping borrowers stricken by the pandemic since there is the installment suspension until the end of the year,” Kronides said.

He said he understood the concerns but suspending the process would not help cases that related to cases, which have been finished for many years.

Bills affecting foreclosures were submitted by Edek, the Green party, Akel and far-right Elam.

According to the finance ministry Akel’s proposal, which calls for suspension of foreclosures involving primary residences or businesses dwellings worth up to €350,000 until the end of 2020, essentially benefits rewards beneficiaries of a state-backed mortgage relief scheme who decided not to apply, or those who did but were rejected because they exceeded the asset and income criteria.

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