Source: CNA
The Finance Ministry has stressed the importance of having stable legislation regulating out-of-court auctions, in tandem with an effective insolvency framework in order to achieve a reduction of bad loans.
It is "extremely important under present difficult economic circumstances which have been created from the impact of the Russian war in Ukraine, to maintain the sustainability of restructured loans of households which are already burdened," the Finance Ministry says in a press release.
It also welcomes a recent announcement of State-owned asset management company, KEDIPES that in the context of rising interest rates it will subsidize the interest rates so that the interest rate for restructured and performing loans for house purchase and other loans will not exceed 3.5% and 4.0% respectively in 2023.
The Finance Ministry notes that the new foreclosures framework voted by Parliament in August 2019 provides the possibility of an out-of-court recourse of borrowers who have non-performing loans (NPLs) to the Financial Ombudsman so that he can review their complaints against credit institutions to do with excessive charges and a violation of the Central Bank of Cyprus' code of ethics.
"If the Financial Ombudsman finds that there has been a violation on the part of the creditor of the code for restructurings, the borrower is entitled to go to Court which can issue immediately an order suspending the foreclosure of his house or business premises," the Ministry adds.
An additional reason a borrower can invoke in Court is also if the credit institution has refused or did not enter a process of restructuring of the loan, it says.
The Ministry also refers to the various schemes it has put in place since 2019 to help distressed borrowers, adding that approval by the European Commission is pending on the latest "Rent-To-Mortgage" scheme which aims to help truly vulnerable borrowers, irrespective of whether they have already applied to previous schemes, and would cover cooperative borrowers who had applied to previous schemes but were deemed as non-sustainable.
It further reaffirms its support "to efforts at a European level to complete the banking union and enhance the durability of the Eurosystem as well as to improve the management of NPLs in the economy."
The Finance Ministry stresses the weight placed by international credit rating agencies in rating the Cypriot economy on the particular matter and "the need to intensify efforts."
