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Our View: Irrationality surrounding foreclosures is becoming stronger

There is no end to the long-running foreclosures farce, which will be on centre stage at the House plenum on Friday, when the government bills, which are aimed at appeasing the parties and preventing them passing their own bills, will be put to the vote. Through these bills, the government aims to speed up the court procedures for these cases through the appointment of more judges and to extend the powers of the financial commissioner.

Judging by the reaction of some deputies at Monday’s House finance committee meeting that discussed the government bills, it is unlikely these will be passed without major amendments. Akel deputy Arsitos Damianou said the party was considering tabling the legal framework of proposals prepared by the party that would set up a “safety net for borrowers”, that were at risk of losing their primary residence or small business premises. The main thrust of the proposal, supported by other parties, was to ensure the unhindered access of borrowers to justice, and seek the suspension of the foreclosure, if he can prove the loan included illegal or excessive charges.

The government bills did not “create conditions for the restoration of the rights of prudent and reliable borrowers against the privileges of the banks and the credit management companies”, said Damianou. The “prudent and reliable borrowers” he referred to are at risk of having their primary residence (up to €350,000 value) repossessed because they have failed to repay their housing loans for 10 years or more. Even the claim that they have no access to justice is misleading, considering a foreclosure decision is part of a legal process through the courts. What the parties want is to delay foreclosure procedures further, by offering new legal obstacles.

In a move to curry favour with the parties, the government has also included small businesses in the bills. Why? In the normal world a business that cannot repay its loan on an asset sells it or loses it. This is the law of the free market, so by what rationale is the law protecting businesses that cannot afford to pay for the premises they are housed in? Should a business that is renting premises and cannot afford to pay the rent also be protected by the law?

None of this makes any sense (why should someone living in a property worth €350,000 be protected when there are cheaper properties available?), yet the irrationality surrounding foreclosures is becoming stronger. And there will be more irrationality on Friday when deputies try to ‘improve’ the government’s bills, because people not repaying their housing loans for years, need to be protected and be given new legal excuses to carry on not paying.

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