Further extension on foreclosures freeze unlikely to make it to plenum

A bill extending a freeze on property foreclosures to December may not go to the plenum for a vote this week, after it failed to garner the necessary consensus in committee on Tuesday.

During discussion of the legislative proposal, MPs from Disy and Diko said they oppose another extension on the moratorium on foreclosures – siding with warnings from the government and financial authorities that a further freeze would derail pledges made by Cyprus to the EU to reduce the amount of non-performing loans (NPLs) on banks’ books.

The matter will be revisited on Wednesday during the scheduled meeting of the heads of parliamentary parties, held prior to a House plenary session.

Avgi Chrysostomou-Lapathioti, head of the finance ministry’s Directorate of Financial Stability cautioned that a new freeze on repossessions could adversely impact the release of EU funds from the Recovery and Resilience Facility.

She said EU authorities monitor the legislative goings-on in Cyprus relating to reducing NPLs in the banking sector.

The official added that banking regulators as well as credit rating agencies closely watch the constant changes to the foreclosures regime in Cyprus – hinting that the island risked a downgrade of its sovereign creditworthiness.

Michalis Kronides, representing the banking association, likewise voiced strong disagreement with extending the freeze on foreclosures.

He noted that in actuality 90 per cent of repossessions concern fields and plots of land – and not residences, which MPs are concerned about.

Moreover, postponing foreclosures would not help with the issue of bad loans – merely kick the can down the road.

However Greens MP Stavros Papadouris – one of the sponsors of the legislative proposal – questioned the assertion that the vast majority of foreclosures do not relate to homes.

He said parliament is receiving information from people that banks are moving in on primary residences and business premises.