No suspension of home loans sales by Ministry, Central Bank and Banks


New warnings against the promoted extension of the period of suspension of divestitures were addressed today by the Ministry of Finance, the Central Bank and the Association of Banks.
The parliamentary Finance Committee today continued the discussion of the five bills to extend the period of suspension of sales for non-performing loans by securing a main residence worth up to € 350,000.

 The parties, with the exception of the ruling DISY, do not seem to share the concerns expressed.
Speaking before the committee, the Director General of the Ministry of Finance, George Pantelis, stated that the extension of the period of suspension of sales not only does not solve the problem that has arisen from the pandemic “but will worsen it, because the consolidation in society that we will legislate will exclude possible sales will lead to a further increase in NPLs because it will encourage defaulters not to service their loans “.
“So not only does it not solve the problem it will make the problem worse,” he said.
As he said, in essence, the draft laws “are irrelevant”, because no auction or sale of a first home worth € 350,000 or less is planned. “On the contrary, all the planned sales concern mostly fields, or commercial real estate or holiday homes.”
He also said that a change in the framework governing the sale would be a disincentive for borrowers to service their loans or reach a restructuring agreement with the banks at a time when new NPLs are expected to enter after the end of the installment suspension period at the end. of the year. He also reminded that the capital deficit of the Cooperative, amounting to € 800 million when the supervisor had zeroed the values ​​of the collateral due to the issue of the sale.

In the same vein is the position of the Central Bank of Cyprus (CBC), which through its representative stressed that the existence of MES with long delays translates into increased provisions for banks.
As he said, of the MES securing a main residence worth up to € 350,000, 80.6% are in arrears of more than 180 days. He also noted that 34% of them are in arrears of 1 to five years, while 31% of these red loans have arrears of five to ten years and 15.6% of loans with arrears of more than ten years.
“The supervisor in Frankfurt (ECB) expects increased provisions for long-term loans. “This will disrupt the financial system and we experienced it in 2018 with the Co-operation”, he said.
For its part, the Association of Banks presented data based on which, 800 electronic auctions and 562 physical auctions are planned, without including sales of a main residence worth up to € 350,000. According to the Association, there are planned sales of 268 holiday properties, high value properties for rent, 106 commercial properties, 117 plots and 1,071 fields. As stated by the Director of the Association, Michalis Kronidis, 75% of the sales concern fields.
“Any temporary suspension of sales will not really help cases of borrowers affected by the pandemic, as there is a installment suspension until the end of 2020. On the contrary, continuous changes in legislation create a culture of non-repayment of loans and there is a high risk of increasing this “It can also affect cases of borrowers who serve their loans, but think about stopping them if there are thoughts of changing the context of the sales,” he said.
He said he was concerned about the ongoing pandemic, adding that he did not consider it necessary to comment on such fabrications. “
The Financial Commissioner, Pavlos Ioannou, expressed support for AKEL’s proposal for suspension of the sales, if it is formed properly.
Saying that the views of YPOIK and KTK are not unfounded at all and that there is no question of horizontal suspension of sales, Mr. Ioannou said that AKEL’s proposal “for a reasonable period” could solve the problem until the state can to take economic policy measures.
The health crisis is rampant and it is completely unreasonable and extremely dangerous to proceed with sales, he said, adding that while borrowers were in negotiations with “sudden” banks they were informed that their loan was sold to a repurchase company or that .
Representatives of the employers’ organizations, KEVE and OEB, stressed the need to protect the Cypriot economy.
Borrowers ‘associations, the Movement Against Sale, the First Home Protection Association, SYPRODAT, the Borrowers’ Rights Association expressed support for the bill, saying that there is a reluctance on the part of banks to reorganize.
The Chairman of the committee, Christiana Erotokritou, Deputy Chairman of DIKO said that there should be a cooperation or synergy of all to solve the problem, if with the approval of the suspension there will be a request for its further extension.
On behalf of DISY, Onoufios Koullas said that these proposals “offer minimal benefit and carry a huge risk”. “Banks are the depositors above all and we here in Cyprus should learn this lesson very well,” he said.
AKEL spokesman Stefanos Stefanou criticized banks for selling MES packages to credit-taking companies, adding that the pandemic exacerbated the problem of borrowers, a problem that began with the haircut. He talked about entanglement with big land development entrepreneurs because there are no sales of their non-performing loans, which are more than 50% of red loans.
Responding, the Association of Banks said that 75% to 80% of the planned auctions concern fields and plots, and therefore many cases also concern land development entrepreneurs.
EDEK President Marinos Sizopoulos criticized the banks and added that he would reinstate the party’s proposals for suspension of divestitures by a court decision once the borrower appeals against the banks and for an equal distribution of a NPL to the guarantors in case the can not repay it.

On behalf of the Ecologists ‘Movement – Citizens’ Cooperation, George Perdikis agreed to suspend the sales until March 2021, saying that this is not a solution to the problem. He asked that the context of the sales be returned to where it was before the 2018 amendments were passed.

Source: KYPE