Government unhappy over foreclosure freeze extension

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Finance Minister Constantinos Petrides expressed the government’s disappointment at parliament’s decision to freeze property foreclosures until the end of October, despite repeated warnings.

On Thursday, MPs amended laws governing the transfer and mortgage of immovable property, extending a freeze on foreclosures to October 31.

Commenting on the development, Petrides expressed “great disappointment”.

It is the latest in a series of such extensions, with the initial freeze on foreclosures dating back to August 2021, which were imposed as borrowers came under pressure from COVID-19 lockdowns.

The government warned the House not to extend the freeze as it would disrupt banks’ ability to reduce the stock of non-performing loans (NPLs) on their books.

The majority of MPs voted in favour of the extension by 34 to 14, arguing that they wanted to protect homeowners amid an economic slump.

The halt involves properties registered as the owner’s primary home, valued at up to €350,000, business premises where annual turnover does not exceed €750,000, or parcels of land valued at €100,000 or less.

In a statement, Petrides said the move foils the good work achieved by the passage of two other bills relating to debtors.

These bills allow credit acquiring companies’ to access debtors’ financial information, argued to be crucial for unlocking Cyprus’ access to an €85 mln tranche from the EU’s Recovery and Resilience Fund.

Petrides attributed the House’s stance to populism ahead of the Presidential Elections in February 2023.

“This comes at a particularly difficult time when the economy faces international crisis; at a time when any downgrade of the Cypriot economy’s credit rating could spell disaster.”

He argued that he could not see the rationale behind MPs’ insistence on the foreclosure freeze, as the government has rolled out various schemes to protect primary homeowners who have defaulted on their mortgages.

“Suspending foreclosures at this crucial period also endangers the rollout of the much-anticipated ‘Mortgage to Rent’ scheme.

“The €400 mln scheme aims at protecting primary residences of vulnerable households including the non-viable debtors under the ‘Estia’ programme, EU approval of the scheme depends on the effectiveness of the framework providing for foreclosures.”