The Attorney General’s office received the final draft of the repossessions bill late on Tuesday, which means that the legislation which is being demanded by the Troika of international lenders in order to help relieve banks from non-performing loans (NPLs), will not make it to the Cabinet in time.
But the bill has to be passed in order for the fifth review of the bailout agreement to be concluded.
Passage of the bill will also pave the way for the Troika to release the next tranche of its bailout for Cyprus, of the total 10 bln when one bank was shut down and all its troubles passed on to another as part of the March 2013 deposits-for-equity “bail in” of savers’ money.
The bill on foreclosures and private auctions of mortgaged properties was finalised after disagreements with the Troika mission who are expected to conclude their review of Cyprus’ economic adjustment programme by Friday, July 25.
Discussions between the authorities and Cyprus’ lenders are focusing on striking the right balance between the rights of the borrower and the lenders.
The sticky issue of the discussions is the right of the borrower to dispute the auction and contest the price of the mortgaged property.
The text was supposed to have been submitted to the Council of Ministers on Wednesday for approval and then submitted to the House of Representatives, while time should be given to the Law Office of the Republic for legal vetting.
The issue of foreclosures is believed to be the most important subject of the current review as the new framework providing for foreclosures and private auctions should have been implemented by June.
Based on the Memoradum of Understanding agreed with the Troika, primary residences are exempt from foreclosures until the entry into force of the legal framework governing corporate and personal insolvency procedure in the coming December.
The meeting between the Finance Minister, Central Bank Governor Chrystalla Georghadji and the Troika heads of Mission over the agreement on the fifth updated MOU is scheduled for Thursday, marking the conclusion of the fifth review.
The Troika officials are pressing for expediting foreclosures as they believe that this would encourage borrowers to repay their loans or agree to restructure their loans. Debt restructuring is a key element of the Cypriot bailout programme, as NPLs (loans in arrears over 90 days) in the banking sector have reached EUR 27 bln, or about 45% of all loan books in the commercial and Cooperative banking sectors.
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