A pro-debtors group on Tuesday blamed the government for the low uptake for the Estia debt relief scheme, saying the red tape involved disqualified many borrowers who now risk having their homes repossessed by banks.
In a statement, the Association for the Protection of Borrowers (Syprodat) said “the failure of the Estia scheme is primarily due to the negligence and indifference of the finance ministry, but also the narrow-mindedness of those dealing with the matter.”
It added that the government had not heeded calls to simplify the application process or the supporting documentation required.
It said it now expected rejected applications to be reconsidered, so the greatest number of borrowers could join the scheme.
For those borrowers who still don’t make the cut, the association said the state should see to it they are enrolled in the planned asset management company, or ‘bad bank’.
Syprodat also urged all struggling debtors to apply for Estia anyway, even if they are unviable borrowers, so that at least the finance ministry has their paperwork on file and can then take steps to protect their primary residence from foreclosure until such time as a new debt relief scheme is rolled out.
According to data released by the finance ministry last week, a mere 802 applications of the thousands filed were approved. Meanwhile 62 per cent of completed applications were denied, while 17 per cent of debts were deemed unviable.
Overall 6,393 applications were filed for Estia, of which 4,374 were fully completed.
Main opposition party Akel said the Estia scheme crashed because of the government’s failure to protect primary residences from the threat of foreclosure.
The party said the “much-touted scheme, having doled out hope to thousands of borrowers, ultimately confirmed the major weaknesses and gaps in its initial design. Thousands of low-income borrowers were not approved.
“Many more did not complete their application due to the increased cost, while at the same time a large part of borrowers did not apply at all. For this state of affairs, the government is solely responsible.”
Under Estia, officially launched in September 2019, the state will annually pay 1/3 of a borrower’s restructured loan installment, provided commitments are met.
The primary residence which is mortgaged must have a maximum market value of up to €350,000. The Estia scheme applies to the first mortgage on a residence and covers loans or credit facilities regardless of currency.
It applies to loans (mortgages) that were classed as non-performing as at September 30, 2017. Loans designated as non-performing after that date are not eligible.
Meantime a bill that would have extended a freeze on foreclosures for another three months, until the end of October, is now tied up at the supreme court after the president refused to sign it.
The previous moratorium on repossessions elapsed on July 31.
The moratorium was intended as relief due to the particular circumstances of the coronavirus situation.