No foreclosures on first homes until the end of 2023

In a development concerning foreclosures, four months after the summer 2023 decisions, the data remains unchanged. Banks and credit redemption companies have been urged to provide a two-month grace period for first homes and properties up to 350 thousand euros. This will allow the government to formulate a definitive stance on the foreclosure framework. According to insider information, this grace period is expected to extend until December, providing the government with time to decide on the financial commissioner's jurisdiction and the Central Bank's special mechanism, as proposed by DIKO, DPA, and EDEK.

Both banks and servicers are confident that this grace period offers ample time for the government to make necessary decisions without the risk of further changes down the road.

Two potential scenarios have emerged. Either banks voluntarily halt the sale of first homes and properties up to 350 thousand euros, or the relevant parties propose legislation to freeze the issue entirely. The outcome remains the same, but what distinguishes this period from the previous one is the call for a clear and consistent foreclosure policy. Sources from both sides emphasize the disruption caused by voluntary loan suspensions and repeated suspensions by the House of Representatives since the onset of the pandemic in 2020. The lack of coherence and potential repercussions on lending are a growing concern.

Notably, not all banks and credit acquisition companies were in favor of granting more time for government decisions, and there was backlash during discussions. Critics argue that the government has had sufficient time to make decisions and that these deliberations may undermine the upcoming Rent versus Rent Plan, which is set to launch soon.

President of DISY and the House of Representatives, Ms. Anita Demetriou, has also called for a two-month suspension of foreclosures. She expressed disappointment in the government's failure to meet deadlines for submitting a comprehensive proposal. Demetriou urged banks and credit purchase companies to extend the suspension to allow for further improvements in the foreclosure framework.

Concerns have arisen about the pace of implementing decisions related to the Financial Commissioner and the Central Bank mechanism. Experts in banking suggest that it may take 1-2 years for these measures to become fully operational. The delay in taking action may lead to further suspensions of foreclosures and questions about the effectiveness of extending the Financial Commissioner's powers and implementing the Central Bank mechanism.

Supervisors closely monitor changes to the foreclosure framework, and they emphasize the importance of efficient legal frameworks and swift judicial procedures to reduce non-performing loans. Any measures that could cause delays in legal proceedings and impact asset values are viewed with concern by banking supervisors.

Elizabeth McCaul, a member of the ECB's Supervisory Council, stressed the need to strengthen frameworks for reducing non-performing loans and preventing their accumulation, opposing initiatives that may undermine ongoing success.

[This article was translated from its Greek original]