Cyprus & World News

Cyprus and Troika disagree on timeframe of foreclosures bill

19 July, 2014

The Finance Minister told the House Finance Committee that there is disagreement between the Government and Cyprus' lenders over the foreclosure legislation on mortgaged properties, Committee Chairman Nicolas Papadopoulos said.
Speaking after a meeting with the Troika mission heads at the Parliament, Papadopoulos said that Cyprus’ international lenders insist on legislation allowing for the foreclosure and private auctions of property reaching Parliament the soonest.
“The Finance Minister told us that so far there is no agreement on the foreclosure legislation,” he said, but added that “this does not mean that there is no chance for an agreement to be reached in the coming days”.
However, he admitted that passing this legislation through the House would be a precondition for the disbursement of the sixth bailout tranche.
According to Papadopoulos, the Troika officials said that “there are positive developments and the implementation of the Memorandum is progressing well”.
However, speaking on behalf of his DIKO party, he noted the high percentage of non-performing loans (NPLs), the lack of liquidity in the banking sector, as well as the high unemployment rate.
“We must find ways to deal with the high percentage of NPLs,” he said, pointing out that the implementation of the part of the Memorandum concerning the banking sector is not progressing well.
The problems will not be solved through foreclosures, he noted.
Opposition AKEL MP Stavros Evagorou said Parliament should be given sufficient time to discuss the legislation, adding that his party intends to table a bill they had previously proposed with the socialist party EDEK on the protection of the primary home.
EDEK MP Nicos Nicolaides warned that initiating foreclosure of mortgaged properties will backfire as it will increase bad debts in the banks.
NPLs must not be addressed all in the same way, he said, noting that massive foreclosures will lead to a reduction of real estate prices, a drop in the values of mortgages and an increase in the bad debts of the banks, in turn.
“We need measures and procedures that will give the banks tools to deal with big debtors and those who can repay their loans but are not doing so, protecting at the same time vulnerable borrowers,” he added.
European Party (EVROKO) President and MP Demetris Syllouris said that the Central Bank, the banks and the financial ombudsman, must begin a dialogue with the parliament if they want it to approve the legislation, noting that before the banks are given the foreclosure tool, they must first review their practices and put their house in order.
Greens MP Giorgos Perdikis said that the Troika refused to change the definition of NPLs, as required by the MPs during the meeting.
He said that the government and parliament must insist on the foreclosure legislation to target those who can repay their loans but are not doing so.
The Troika mission arrived in Cyprus on Monday. They are expected to have meetings with local stakeholders until July 22 and to conclude their review by July 25.
So far the country has had four positive programme reviews.