Contentious foreclosure legislation sparks debate in Parliament

The issue of foreclosures remains unresolved and will be the focal point of the upcoming plenary session on Thursday, July 13. During Monday's joint session of the Finance and Legal Committees, the discussion mainly revolved around the establishment of a special jurisdiction within the District Court. This jurisdiction would handle disputes arising from credit facilities secured by principal residences worth up to 350 thousand euros.

The Government Bill, as decided, will be brought to the Plenary for voting, along with the reintroduction of two controversial bills that were not passed in the previous session.

Despite the Government's efforts to address non-performing loans through seven proposed actions, which were submitted to the House by Finance Minister Makis Keravnos, it seems that the two controversial bills have not been dismissed. Members of Parliament appear unconvinced by the Government's measures to improve the foreclosure framework. It is likely that at least one of the law proposals, considered "disastrous," will be voted on during the upcoming plenary session. This proposal would halt the foreclosure process until the amount owed is determined. Given the current pace of these legal issues, foreclosures could take several years to complete.

Finance Minister Makis Keravnos stressed in his address to the Finance Committee that a blanket suspension of foreclosures does not solve the problem but exacerbates it. He emphasized that a proper foreclosure framework is essential to avoid negative impacts on credit rating agencies and the economy as a whole.

Minister Keravnos acknowledged the challenges faced by vulnerable groups and stated that the government measures aim to alleviate their problems without weakening the foreclosure framework or negatively impacting the economy. He emphasized that while the Cypriot economy is in good shape and can service its debt, imbalances still exist.

Minister Keravnos reiterated multiple times that the Government will not agree to a broad suspension of foreclosures as it fails to provide a solution and instead creates more problems.

The two legislative proposals at the center of the debate are the Transfer and Mortgage of Immovable Property (Amendment) (No. 5) Act, 2023 and the Consumer Credit Agreements in Relation to Residential Property (Amendment) Law of 2023. The former would grant borrowers the right to obtain a decree suspending the sale procedure until the amount due is determined. This proposal raises concerns about financial stability, as warned by the Ministry of Finance and the Central Bank. The latter proposal relates to the sale price of a property, suggesting that it could be set at the value of the property when the loan was contracted.

[This article was translated from its Greek original]