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DIKO to block Cyprus foreclosures bill

27 August, 2014

 * Anastasiades calls party leaders for meeting *

The centre-right Democratic Party (DIKO), that was widely expected to support a revised legislation on foreclosures so that it could pass through parliament on Monday and avert another crisis, has decided to reject it, saying it is a “bad bill”.
The foreclosures bill is a demand laid down by the Troika of international lenders so that banks could have a tool to force borrowers to repay their loans and lower the bank’s non-performing loans portfolio. In order to pressure the government and all parties concerned to pass the bill, the Troika has made it conditional to receiving the next tranche of bailout money, estimated at 453 mln euros, or the government could run out of money by the end of November.
DIKO spokesperson Christiana Erotokritou said after a lengthy and “very productive meeting” of the executive council in Nicosia late Tuesday that “the bill cannot be supported as is.”
“We submitted specific suggestions to the President and the Minister of Finance, but unfortunately none were considered. It is a bad bill that will create more problems,” Erotokritou said, adding that the bill “changes wholly the balance and NPLs move to the shoulders of borrowers who have no protection.”
Earlier in the day, President Nicos Anastasiades, who has called all party leaders to a meeting to discuss the controversial bill on Thursday, found support from the Borrowers Association and the Primary Home Association, whom he reassured that low-income and vulnerable borrowers would be protected as the foreclosures process would be arduous, transparent and always in the borrower’s interest.
Borrowers Association President Costas Melas, appealed to the political parties to approve the bill into law and assured that with the amended bill and the safety clauses it contains, no mass foreclosures will take place.
Primary Home Association Chairman Stavros Papadouris said the rights of borrowers and owners of primary homes are being safeguarded to a point with the bill.
He said that positive moves on the part of political parties will help reach a consensus that will protect the proper borrowers and owners of primary homes.
The foreclosures bill needs to be approved by the House of Representatives before the next Eurogroup meeting in mid September, with parliament expected to convene on Monday in an extraordinary plenary session to discuss the bill.
Thursday’s meeting at the Presidential Palace is due to discuss the bill on foreclosures of mortgage properties prior to it being tabled to the House.
On Monday, Anastasiades also met with the Chairmen and Chief Executive Officers of the Cypriot banks and Cooperatives, in the presence of the Ministers of Interior and Finance, whom he informed about the foreclosures bill.
This followed a series of meetings with stakeholders and key members of his cabinet throughout last week with the aim of seeking consensus among most of the political parties.
Although the government has insisted on a number of countermeasures to alleviate a potential impact on low-income home owners, the Troika is reportedly adamant and has not accepted changes, such as a 50% discount on property transfer fees.
On the other hand, the legislation on insolvencies has been brought forward in order to be bundled with the foreclosures bill, satisfying a demand of the majority of opposition parties.
Also, the government seems to be ready to proceed with upgrading the role of the Housing Finance Corporation from a financier to a portfolio manager, whereby the state would step in to ensure that foreclosed properties do not fall in the hands of property sharks.
Although the government reached a deal with the Troika, opposition parties say the bill cannot be approved as it is and want further changes or additional legislation. International lenders have ruled out all changes proposed by political parties.