Banks extend foreclosure freeze

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Banks and credit buyout companies are likely to extend the freeze on foreclosures of primary homes valued up to €350,000, as they have accepted the Ministry of Finance’s call in principle.

Online news website Stockwatch said banking institutions will voluntarily extend the time frame for suspending sales of first homes worth up to €350,000 until the end of the year.

According to the outlet, the financial institutions said to accept Finance Minister Makis Keravnos’ plea, they demand a meeting with President Nikos Christodoulides to address the issue.

Top bank executives have pointed out that supervisory risks of prolonging the freeze for too long would increase.

“The credibility of a state is not enough only in its words; it must also be seen in actions”, Stockwatch quoted one banking source.

The freeze introduced by financial institutions and credit acquisition companies in July to suspend sales expires Tuesday.

It came into force following consecutive freezes introduced by legislators during the COVID pandemic, renewed in the aftermath of the war in Ukraine and sanctions on Russia.

MPs are split over a controversial bill allowing defaulted borrowers to request that foreclosure procedures be put on ice with a court order while they resort to justice to resolve a dispute with the bank.

The decision was taken earlier this summer, with Parliamentarians also deciding to delay the voting on a government bill that would establish special-jurisdiction courts to address foreclosure disputes related to primary residences valued up to €350,000.

Stockwatch said the Finance Ministry has intensified consultations with parties DIPA, DIKO and EDEK, backing President Nikos Christodoulides to garner support for its bill to create special courts for disputes involving foreclosures.

Keravnos met with officials of the Opposition parties, focusing on the additional provisions of the bill.

He is unhappy with amendments added to the bill by the parties, which interfere with the powers of the courts to be established.

One provision added to the bill gives the Financial Ombudsman the right, while a borrower’s case is pending in court, to decide whether banking institutions have abused the loan terms and issue a freeze on the foreclosure of disputed property.

A legal source told Stockwatch that the amendment was “a flagrant interference with judicial power”.