Housing Finance Corporation gets green light to buy and sell loans

The state-owned Housing Finance Corporation (HFC) will be able to buy performing loans and sell its non-performing loans like any other bank, under a law passed by the House on Thursday.

Up until now, the legislation regulating the HFC’s operation had not explicitly stated whether the organisation can engage in these transactions. As a result, to date the entity had not foreclosed on any properties linked to non-performing loans.

Thursday’s law allows the HFC to operate like any other licensed credit institution.

According to data submitted to parliament by HFC general manager Christoforos Kaplanis, as at the end of 2022 just under 44 per cent of the organisation’s loans were classed as non-performing. The NPLs accounted for €274 million out of the total loan portfolio of €627 million.

The majority of the HFC’s loans consist of mortgages.

Kaplanis also told MPs that, due to procedural issues, it will take some 18 months after the law’s enactment for the HFC to be able to buy performing loans and sell NPLs.

Regarding the NPLs, these concern 2,335 accounts, of which 172 are loans underwritten by the state. The HFC has a total of 8,024 accounts on its books.

The HFC was established in 1980 with the aim of granting housing loans to low/medium income families. It is supervised by the Central Bank of Cyprus.