Government reworks foreclosure laws after committee concerns

Government foreclosure bills were sent back to the Finance Ministry after gaps were identified during a discussion at the House Finance Committee.

The issues raised focused primarily on procedural deadlines before properties are auctioned, prompting lawmakers to request revisions to the proposed framework.

The bills form part of a broader effort by the government to strengthen the foreclosure framework without imposing a blanket freeze, in line with its stated policy direction.

The proposed legislation introduces an upgraded debt verification mechanism through the Financial Commissioner, including the addition of a restructuring option.

At the same time, the framework provides for binding decisions by the Financial Commissioner for disputes up to €20,000, particularly in complaints against financial institutions.

Under the proposals, borrowers would be allowed earlier access to the Financial Commissioner, upon receiving the initial Type I notification rather than the later Type IA notice.

The discussion also led to the withdrawal of a number of proposals from the total of 26 currently before the committee, as parties sought to streamline the legislative process.

Due to tight timelines ahead of parliamentary dissolution, there is a possibility that three extraordinary plenary sessions may be scheduled on April 6, 2026, April 16, 2026, and April 23, 2026.

A central feature of the bills is a 30-day suspension of foreclosure procedures, offering borrowers additional time to seek solutions.

During this period, both borrowers and creditors would have 15 days to agree on a restructuring proposal put forward by the Financial Commissioner.

If no agreement is reached within that timeframe, an insolvency practitioner would intervene, triggering the application of the insolvency framework.

The practitioner would assess the borrower’s financial situation and propose alternative solutions such as consensual settlements or personal repayment plans.

Once the 30-day period expires, foreclosure proceedings would resume as normal, unless an agreement is reached or a protective court order is issued under a repayment plan.

The proposed provisions would apply specifically to primary residences valued up to €350,000.

According to a representative of the Finance Ministry, the introduction of binding decisions aims to enhance the effectiveness of the Financial Commissioner in resolving disputes.

Under the framework, affected parties would have 21 days to appeal to a district court, which could either uphold or amend the commissioner’s decision.

In cases of non-compliance, the commissioner would be able to impose administrative fines on financial companies, while courts could issue enforcement orders.

The Finance Ministry rejected a proposal by Dipa to extend the binding threshold to €50,000, despite arguments that such a move would cover around 90 per cent of cases.

“The courts should limit their review to procedural matters rather than the substance of decisions,” said Financial Commissioner Valentina Georgiadou, expressing concern that broader judicial intervention could alter the institution’s role.

Moreover, banks and financial companies raised objections to the binding nature of decisions, with some arguing that judicial examination of the substance could be unconstitutional.

“It must be decided whether tools will be given to borrowers,” Georgiadou said, responding to these concerns.

Lawmakers also called for an extension of the deadline for borrowers to file complaints with the commissioner, proposing 30 days instead of the current 21, a change accepted by the government.

Banks, for their part, requested that the timeframe for reaching restructuring agreements be extended to 30 days from the current 15, while credit-acquiring companies opposed the involvement of the insolvency framework.

A representative of these companies argued that the proposed measures would further complicate the process, rather than simplify it.

Insolvency practitioners also called for longer timelines, stating that 45 to 60 days are required to effectively assess cases, compared with the one-month suspension period currently envisaged.

The Insolvency Service indicated that further clarification is needed regarding when procedural timelines begin, highlighting implementation concerns.

The latest developments come amid ongoing political discussions over foreclosure policy, with the government maintaining its opposition to broad suspension measures.

“We are being monitored by rating agencies, we are being monitored by the European Union and the institutions from which we have borrowed and which assess us,” said Finance Minister Makis Keravnos last week.

“Therefore, horizontal issues regarding foreclosures, with a freeze of foreclosures at this time, should not be discussed,” he added.

Instead, the government has focused on targeted interventions to strengthen institutional mechanisms, particularly the role of the Financial Commissioner.

The revised bills are expected to return to parliament once the identified gaps are addressed, as efforts continue to balance borrower protection with financial stability.