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Cyprus

Ad hoc committee to examine foreclosures bills

The House finance committee has decided to set up an ad hoc committee to examine 13 different bills on foreclosures with the main aim of finding a common approach to the issue, which is currently considered the biggest obstacle to faster and fairer restructuring.

At the same time, committee chairwoman Christiana Erotokritou said on Tuesday that the Central Bank and the Association of Banks were leaning towards accepting a request for further suspension of foreclosures on certain categories of loans until July 31, 2021.

In December, MPs had passed an amendment to the law extending a previous freeze on foreclosures. The current extension ends this month. Main opposition Akel has proposed that it be further extended until the end of July. The proposal concerns primary residences valued at up to €350,000, business premises valued at up to €150,000 and agricultural land valued at €150,000.

“We are very pleased,” Erotokritou said, not only because it would give more time to the finance committee to regulate the matter in the right way but because the goal is to find the right mechanism for restructuring, not to foreclose.

“The goal is not the sale, the goal should be restructuring, and the main reason we do not have the number of restructurings we all want is the dispute between credit institutions over the balances because there is a difference in approach to issue of over-indebtedness,” she added.

“For this reason, the Finance Committee is setting up an ad hoc committee where all the proposals will be combined and a mechanism will be found so that the restructuring and not the sale can proceed with the agreement of the two parties,” she added.

Akel’s party spokesman Stefanos Stefanou expressed satisfaction, saying there was a good chance of the extension being approved due to the ongoing pandemic.

He also said it would be beneficial during discussions at an ad hoc committee to formulate joint proposals so they could be submitted to the plenary for a vote as soon as possible.

“Changes are needed in matters such as abusive clauses and bank overdrafts, loan balances, the granting of the right to legal aid and the unimpeded access of debtors to justice,” he said.

The government, the central bank and foreign organisations have previously warned against constantly extending the suspension of foreclosures, saying it would further bolster the weak repayment culture and impact the lenders’ capital and provisions for bad debts.

It could also prompt ratings agencies to downgrade Cyprus to non-investment grade, a move that would make it impossible for the island to borrow from international markets.

During a previous meeting of the House finance committee, the central bank said 80.6 per cent of non-performing loans with primary residences worth up to €350,000 as collateral were past due more than 180 days. Of those, 34 per cent were behind between one and five years while 31 per cent showed delays of between five and 10 years.

Non-performing loans with delays of over 10 years reached 15.6 per cent.

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