Finance ministry concerned over unpaid housing loans

The finance ministry has expressed alarm and dissatisfaction at the high amount of money owed to public-law organisations that give out loans to people for housing – loans which the state underwrites.

“The greatest risk of loss of moneys for the government presents in the loans granted to individuals through public-law organisations and other financing organisations…and where the monitoring of these loans by the involved organisations has not been as expected,” the finance ministry states in its latest Fiscal Risk report.

In particular, the report flagged three organisations – the Housing Finance Corporation (the worst offender), the Central Agency for the Equitable Distribution of Burdens, and the Cyprus Land Development Corporation.

At the end of March 2022, 61.67 per cent of loans granted via the Housing Finance Corporation (HFC) were classed as non-performing. Also, the HFC terminated contracts and/or took legal action for 112 loans with a balance of €59.7 million.

At the Central Agency for the Equitable Distribution of Burdens, at the end of March 2022 non-performing loans accounted for 27.9 per cent (€96.5 million) of all loans.

The Cyprus Land Development Corporation was likewise in hot water regarding loans it has granted since the year 2001 to low-income families. At the end of March 2022, the balance on performing loans stood at €7.64 million, while the balance on non-performing loans was €34.17 million.

Moreover, the organisation has gone to court for 139 of its 521 loans classed as non-performing. Title to the properties remains with the entity until loans are repaid in full.

In the report, the finance ministry says that non-performing loans, loans in arrears and the taking of legal action against principal debtors, poses risks of loss of moneys “given that the aforementioned loans have been granted with government capital and their non-recovery will constitute a loss for the state”.