Our View: Foreclosures law shamelessly used to protect strategic defaulters

It is reassuring to hear a senior politician talk honestly about the irresponsible political exploitation of the foreclosures law by the political parties. In an interview published in Monday’s Politis, finance minister Constantinos Petrides slammed the latest suspension of the foreclosures law, which he said could cause problems for the second planned instalment of EU funding, as the EU “considers it very important to safeguard a reliable framework for foreclosures”.

The antics of the opposition parties, which suspended this law until the end of January, has made a joke of the law. Petrides said for the EU, another suspension was not justified as “we no longer have a temporary arrangement, which was initially implemented because of the pandemic, but a permanent, dangerous situation for the banking sector, as it establishes a culture of borrowers not honouring their obligations.” With the latest extension, the minister said, we were completing 15 months under a regime of suspended foreclosures. Brussels could not comprehend the rationale of the suspension, given there are no social or financial criteria and is so broad it covers farmland and business premises, regardless of the size of the loan.

Petrides also asked a pertinent question: “How many truly vulnerable people have lost their primary residence because of foreclosure?” He also gave the answer: none. Vulnerable families had been protected and the populist suspension of foreclosures for farmland and business premises was totally unjustified. What started out as a plan to protect primary residences has been expanded to cover business premises and farmland, which in effect means it has been protecting strategic defaulters.

The reason the government’s Estia scheme – which offered people not repaying their housing loan a discounted repayment schedule, subject to certain criteria – had such a low number of applicants was because many of them did not satisfy the criteria, said Petrides. “When you have incomes and property but refuse to use these to repay your loans you are rejected, because the taxpayer will not pay for you.” The number of those eligible for the Estia scheme was much lower than expected, something which, according to Petrides indicated the “size of the problem of strategic defaulters, who are the one that should worry about foreclosures”.

These are the people, who are in danger from the foreclosures law and the people the opposition parties are protecting, while claiming, misleadingly, they were protecting the primary residences of the ‘vulnerable’.

It is a myth, shamelessly used to excuse the protection offered by opposition parties to strategic defaulters of all types. The idea that business premises should be protected is beyond all logic, but proof that populist parties are doing favours to defaulters on the false pretext of protecting the primary residence of the ‘vulnerable’.

It is a pity that Petrides is the only politician prepared to expose this myth.