Panayiotis Rougalas
As debate continues over changes to foreclosure laws and Parliament races to pass legislation that will reshape the framework, the Mortgage to Rent scheme has once again come into focus. Officials are considering reactivating the program for two to three months to allow more borrowers to participate. This move could also make room for a targeted suspension of foreclosures tied to loans within the program’s scope. While nothing has been confirmed yet, such a step appears likely.
On Thursday, Finance Minister Makis Keravnos moved quickly to submit two bills that, he said, are designed to protect citizens by strengthening existing institutions. With this move, the government aims to introduce changes to the foreclosure framework while preventing some of the legislative proposals already submitted to the House of Representatives from advancing. Lawmakers have put forward 26 proposals seeking to revise the framework before Parliament is dissolved in its current form. They are also calling for a general suspension of foreclosures until any approved changes take effect.
Of those 26 proposals, only six or seven appear to have enough support to move forward. Discussion of both the government bills and the legislative proposals will continue in the Finance Committee on Monday, March 23. The final plenary session of Parliament is scheduled for Thursday, April 2, 2026.
The two bills
The bills aim to strengthen the Financial Ombudsman’s existing debt verification process by adding the option of debt restructuring and introducing binding decisions of up to €20,000 on complaints against financial institutions. Borrowers would also be able to обратиться to the Ombudsman earlier in the process, starting from receipt of a “Type I” notice instead of a “Type IA” notice.
Under Bill A, the current legal framework allows a borrower to request a temporary halt to the foreclosure of a primary residence valued at up to €350,000 while the Financial Ombudsman reviews and verifies the outstanding debt.
This review process takes about 60 days. Afterward, foreclosure proceedings either resume as normal or restart based on a revised debt amount. In practice, debt verification pauses the process temporarily, but the Ombudsman does not have the authority to permanently suspend or cancel a foreclosure.
The proposed changes would allow borrowers who cannot reach an agreement with lenders on restructuring or repayment to turn to an Insolvency Advisor. The advisor would help develop a settlement plan, including a Personal Repayment Plan.
According to the explanatory report, the proposal is intended as a last-resort measure to protect primary residences by halting foreclosure proceedings and steering cases toward debt restructuring.
Up to €20,000
The bills also introduce binding authority for the Financial Ombudsman on complaints of up to €20,000 against financial institutions. The Finance Ministry says this change will strengthen consumer protection, ease pressure on the courts, and over time enhance Cyprus’ reputation for high-quality financial services.
This threshold is estimated to cover about 75 percent of complaints submitted to the Ombudsman. These complaints span the entire financial sector, including banks, credit-acquiring companies, investment funds, and insurance firms. Officials note that the binding nature of these decisions will not significantly affect foreclosure procedures. However, it will provide added protection for consumers using financial services such as loans, investments, and insurance policies.
Bill B similarly focuses on strengthening the debt verification process by adding restructuring options and introducing a mechanism to ensure compliance with the Ombudsman’s decisions.
