Parliament approves foreclosure law

A significant mobilization by the Government and the Central Bank of Cyprus took place this week regarding the framework of foreclosures, primarily to withdraw the "problematic" proposal that, according to the state and banks, would have negative consequences for the Cypriot economy.

On Thursday, the Parliament voted on two out of the four legislative proposals concerning foreclosures, which were included in the package of seven measures sent by the Ministry of Finance to the Parliament for a "smooth handling" of the whole issue. The remaining legislation proposal, which allows debtors to appeal to a competent court to suspend the foreclosure process until the exact amount owed is determined, is expected to be discussed again on the upcoming Monday, July 10, during the last session of the Economic Committee before the summer recess.

Until October, we will see an intensification of efforts to strengthen the framework of foreclosures, as the "very bad" scenario of the legislative proposal that could halt a foreclosure until the exact amount owed is determined has been avoided. In the next four months, the situation will be as follows: political parties, the state, the Government, banks, credit acquisition companies, and domestic supervisors will seek to find a compromise so that the foreclosure system can function, while borrowers have sufficient support and protection. The goal is to find a solution to all the open issues related to the framework of foreclosures.

The Government has certainly made some concessions regarding foreclosures. Among the seven government actions to address non-performing loans, two legislative proposals submitted by the political parties were included, which were essentially the proposals voted on in the plenary on Thursday, July 6.

Two days prior, specifically on Tuesday, July 4, all relevant stakeholders gathered at the Presidential Palace, and it was decided to suspend first residence foreclosures up to €350,000 until the end of October.

The combination of the seven government actions, along with the decision to suspend first residence foreclosures, and all of this under the framework of the rental scheme against installment, which received approval from the European Commission, bought the necessary time to address the whole issue.

During the plenary session, another legislative proposal was submitted, which will be discussed in the upcoming sessions of the Economic Committee. It was signed by DIKO, EDEK, and DIKO, and essentially contains provisions of the mechanism created by the Central Bank of Cyprus. Through this legislation proposal, borrowers will be allowed to appeal to the Court for an injunction to suspend the foreclosure, but this time for first residence properties up to €250,000 in value. However, the disputed amount will have to be based on a certification signed by an Auditor, an Audit Office, or an Insolvency Advisor.

[This article was translated from its Greek original]