Foreclosure reform pushed as MPs demand urgent action

MPs on Monday called for urgent changes to Cyprus’ foreclosure laws, pressing for the protection of borrowers and guarantors.

Akel MP Aristos Damianou told the House finance committee that for a decade his party has sought “to restore the balance between the privileges of banks and, more so, credit acquisition and management companies and the elementary rights of borrowers and guarantors.”

He said the most basic right is “unhindered access to justice,” allowing borrowers to suspend the sale of primary residences or small business premises in cases of disputed loan balances or abusive clauses.

Damianou said similar efforts had historically failed and urged that bills submitted by Akel and other parties be discussed by February.

“On Christmas Day, people were being evicted as a result of the existing legislative framework,” he said, adding that the finance minister “has pre-eminently rushed without listening to the proposals on their merits.”

Ecologists president Stavros Papadouris called for discussion of auction laws as soon as possible.

He highlighted a bill resubmitted in December 2023 that would allow borrowers to have courts determine the legal amount of debt before auctions proceed.

“In Cyprus, the completion of an auction is allowed within nine months to one year, while the determination of the legal amount of debt through the courts can take seven to nine years,” he said.

He also called attention to abusive clauses in non-performing loans affecting guarantors.

The push for reform has reignited tensions in parliament.

Disy and Diko MPs are expected to oppose both bank taxation proposals and foreclosure law changes, defending the legislation approved in 2023 for the special foreclosure court.

However, the provision allowing the supreme court to establish said court remains optional, leaving borrowers with limited recourse.

Previous interventions have emphasised the human cost of foreclosures.

Last November, the House refugees committee called on loan acquisition companies to halt foreclosures for three months to allow negotiations with vulnerable borrowers.

Committee president Nikos Kettiros said, “If there is no response, parliament will consider legislative interventions to protect the vulnerable borrowers.”

The debate is shaping up as a key issue in the election campaign, with Akel urging other parties, including Dipa and Edek, to join forces against what it describes as the “bank lobby.”

Papadouris warned, “We are at a point where serious political decisions must be made.”

The bills under discussion aim to restore borrowers’ rights to challenge auctions, curb abusive clauses, and improve judicial oversight, while preserving the stability of licensed credit institutions, which have sufficient liquidity and no immediate recapitalisation issues.