Greece, lenders haggle over foreclosures
ATHENS, Greece — Greece’s leftist government said Wednesday that it was in a “tough battle” with its bailout creditors over their demand to reduce protections for distressed mortgage holders.
A sharp rise in bad loans on banks’ books because of the financial crisis has emerged as a key issue in the country’s attempted financial rescue. The creditors say home seizures should be easier to make so that banks can clear out the bad loans, while the government is concerned about exposing too many people to eviction.
Finance Minister Euclid Tsakalotos and several other Cabinet members met with representatives of the European Central Bank, the International Monetary Fund, the European Commission and the European Stability Mechanism.
They discussed the spending cuts, tax increases and economic changes that Greece has passed so far as part of its new three-year, $97.5 billion bailout agreed on in August.
The government has promised to overhaul the country’s troubled pension system and tackle the issue of nonperforming loans as part of a long list of demands by bailout lenders in exchange for continued loan payouts and access to bank rescue funds by the end of the year.
Spurred by a surge in poverty and unemployment, bad loans rose from 4.6 percent of the total in 2007 to 34.2 percent at the end of last year, according to the Bank of Greece, with the figure for home loans at about 30 percent.
Mortgage holders with lower and middle incomes have been protected from home seizures during the crisis for primary properties valued at less than $285,000.
Government spokesman Olga Gerovasili said negotiations were focused on setting a lower level.
“This is a major issue which we are in a tough battle over. We have repeatedly stressed that we are committed to protecting primary homes,” she told state radio.
She did not comment on reports in the Greek news media that the government was seeking a new protection limit at $227,000, while lenders wanted the limit cut below $114,000.
The government, re-elected in snap general elections last month triggered by dissent over the bailout, is required to make the changes to overhaul the economy and improve public finances.