House to review critical foreclosures bill MMoossccoovviiccii:: ““YYoouu mmuusstt ccoonnttiinnuuee wwiitthh pprrooggrraammmmee””
The House of Representatives will discuss the final two pieces of legislation about foreclosures and insolvencies on Wednesday, with a narrow vote of approval that could pave the way for a final review by international lenders and Cyprus taking part in the European Central Bank’s bond-buying scheme known as quantitative easing (QE).
The fifth set of bills will be tabled at the joint House Finance and Interior Committee meetings on Wednesday morning after which it may be rushed to the plenary session on Thursday, just days before the current stumbling block of a suspension of the remaining bills imposed by the opposition expires on March 17.
Passage of the bills that regulate foreclosures of properties mortgaged to banks and deemed as non-performing due to the inability of the owners to repay their loans, as well as the framework that secures the primary home and allows guarantors of loans some leeway, has been delayed for fear of lowincome households losing the roof over their heads.
Matters have been made worse by the economic and banking crisis of the past two yeas, as well as the rise in unemployment to 16%, with many borrowers unable to make payments, let alone interest on payments.
Ruling DISY’s 20 MPs are expected to vote in favour of the bills, while former junior coalition partner DIKO’s eight MPs now also seem convinced that the new package will safeguard primary homes of up to a certain value. In the 56-seat House, this will be determined in a narrow vote.
The opposition communist party AKEL and the smaller socialist EDEK, together with the single-seat European Party (Evroko) and the Greens, also want small borrowers protected from the insolvencies.
This is a thorny issue with the Troika of lenders who bailed out Cyprus in a EUR 10 bln economic adjustment programme that includes stricter fiscal policy, a smaller affordable government machine, privatisation of utilities and sale of state assets and general reforms. The delay in the new bills has also held back payments by the European Commission, the European Central Bank and the International Monetary Fund of about EUR 450 mln in funds, as a positive review has not yet been secured. House would pass the five bills pertaining to the insolvency framework and that it would allow for the implementation of a foreclosures legislation in the coming weeks.
He said that on Monday he would brief his colleagues at the Eurogroup that all five bills relating to the insolvency framework are now before Parliament and that discussions on most of them are at an advanced stage.
In statements after the Eurogroup meeting Commissioner for Economic and Financial Affairs Pierre Moscovici said that Cyprus needs continue with implementation of the foreclosures law without further delay, as well as the economic adjustment programme.
He stressed that the implementation of the foreclosures bill is a prerequisite for the positive review of the Cyprus economic adjustment programme and the disbursement of the remaining tranches from the bailout funds.
Moscovici said that Cyprus has made very important and impressive steps towards the creation of new job positions and added that it would be really unfortunate if there is a new delay of the progress that has been achieved due to the foreclosures law.
Government Spokesman Nicos Christodoulides also expressed his optimism that the House will pass the insolvency framework.
He said that this will pave the way for the implementation of the legislation on foreclosures a prior action necessitated so that Cyprus’ 5th review by the international lenders can be completed and the country can continue to receive tranches of its bailout which have been suspended since December. into law in September but had voted to suspend its implementation on December 18, until the insolvency framework, meant to create a safety net for people affected by the crisis, could also be implemented.
The Council of Ministers approved last week the final pair of the long-outstanding bills. The first of two pieces of legislation refers to insolvencies and the framework for guarantors, and the other regulates the auctions and transfers in the case of foreclosures.
“We hope that the two (bills) will secure the necessary majority in parliament,” Christodoulides said, referring to the reservations that centre-right DIKO had expressed for the bills to ensure protection of primary homes in order for its eight MPs to vote for the bill. The ruling Democratic Rally (DISY) has 20 votes in the 56-seat parliament.
Christodoulides added that the bill on insolvencies is “fair” to the thousands of home-owners affected, adding that “this was the government’s strategy from the outset”.
Asked if the final bills enjoy the approval of the Troika officials, he said that “for some time now we have been engaged in talks both with the parliamentary parties and the institutions (Troika), so that we can conclude on a result that will help resolve the problem and at the same time secure all those who are in a needy state.”
Three leading bankers, the chairman of the nationalised and recapitalised Cooperative Central Bank, and the chief executives of Bank of Cyprus and Hellenic Bank have frequently reiterated their positions that the banks will not pursue to grab properties and become realtor companies. Quite the contrary, they insist that the foreclosures package of bills will help them recover securities from large borrowers who have available funds but refuse to cut down their non-performing loans, with NPLs now accounting for more than 50% of the island’s total loanbook.
The first of two bills approved by the Cabinet last Friday relates to the insolvency of natural persons and regulates the restructuring of loans to ensure a smooth repayment programme and secure the primary home from foreclosure, while up to EUR 15,000 of debts may be written off where the borrower can prove insufficient income or funds to repay the loans.
The second bill regulates the transfer and mortgage of properties and determines the procedures for public auctions.