House regulates foreclosures in tense plenum

A broad package of legislature protecting borrowers and guarantors, and regulating foreclosures and dispute resolution, was passed on Monday by parliament in a tense plenum atmosphere.

The plenum approved two government bills amending the law regulating the out-of-court resolution of financial disputes and the law on the transfer and mortgaging of property.

The first bill was passed with 32 votes in favour, 18 against and one abstention. Edek MP Elias Myrianthous abstained, while Akel, the Ecologists Movement and MPs Alexandra Attalides, Irene Charalambides and Zacharias Koulias voted against.

The second was passed with by 37 votes in favour and 15 against. Akel and Irene Charalambides had voted against.

The package of regulations strengthens the role of the financial commissioner, allows debt restructuring and makes the commissioner’s decision binding for disputes up to €20,000. It however allows the banks to appeal the decision and introduces the option of drawing up a personal repayment plan to protect the primary residence.

Many of the provisions included in the package were approved following the acceptance of political party proposals.

These include appointing judges for financial disputes, extending deadlines, improving the insolvency framework, scrapping the demand for additional collateral, the right to appeal the sale of property in cases of disputed debt or abusive clauses, the cancellation of remaining debt when the house is sold for less than the mortgage, an interest ceiling, limiting the liability of guarantors to the initial loan, setting a minimum sale price of 50 per cent of the property’s value in auctions, suspending the sale of residences up to €350,000 until August, and obliging the creditor to first take measures against the debtor before turning to the guarantors.

The debate at the plenum was intense, with MPs arguing over who was responsible for the financial crisis and whether proposals were in line with the Constitution.

Akel general secretary Stefanos Stefanou called on MPs to declare any personal interest in relation to the banks, a proposal that was widely accepted but without a declaration being made. He also said the banks were largely to blame for the financial crisis.

Independent MP Alexandra Attalides argued that the House was too late in addressing foreclosures and pointed out that the people had been treated unfairly for years.

Edek MP Kostis Efstathiou said foreclosures had been turned into a commodity, with loans being sold at low prices for the benefit of the hedge funds, without giving the opportunity to debtors to repay their obligations.

President of the Ecologists Movement Stavros Papadouris said the existing foreclosure framework had undergone so many amendments it should be scrapped and drafted from scratch.

Dipa MP Alekos Tryfonides pointed out that foreclosures were a serious financial and social issue and that his party would be closely monitoring the situation.

Elam MP Sotiris Ioannou said his party opposed the “superweapons” given to the banks and credit acquisition companies by the Disy-Diko duo.

Diko president Nikolas Papadopoulos said the crisis began in 2010 and blamed the then government for failing to prevent the collapse of the economy and the subsequent ‘haircut’.

Independent MP Andreas Themistocleous warned that parliament risked being slammed by the public for its decisions and pointed out that following the crisis thousands of borrowers had lost the ability to repay their loans.

Disy MPs refuted Akel’s criticism. Harris Georgiades recalled policies implemented before the 2013 financial crisis that led to the bank bailout and warned against repeating the same mistakes. Averof Neophytou pointed out that the problem remains the thousands of non-performing loans and called for a comprehensive solution and the creation of a support fund.