According to the MPs, including proposals that provide for the possibility of the borrower to appeal to justice
Determining to bring to the Plenary Assembly before the closing of Parliament in July, proposals for a law on the subject of real estate sales, including proposals that provide for the borrower's ability to go to court, say MPs.
In today's session of the Finance Committee of the Parliament, the discussion on the subject of sales continued, given that a government bill is still expected to create a special jurisdiction of the court to examine financial disputes of borrowers.
< p class="text-paragraph">Financial Commissioner Pavlos Ioannou told the Commission that the existing framework of sales gives too much power to credit acquisition companies and described it as “voracious”, noting that this situation rationalizes the request for the intervention of the legislator. However, he noted that on a practical level this change is not particularly helpful, since even if the borrower is vindicated in court, there will be rare cases in which the amount will be written off and the impairment that will be made should be more than 30% to the borrower benefits.
He added that despite the existing system being distortive, out-of-court settlements could be instituted that would not have macro-economic consequences. Among these consequences, as he said, is the risk that the value of the mortgage collateral will be removed and the bank will ask for an even greater percentage of the value of the property to grant a loan, but also the risks to the creditworthiness of the state and consequently to the his ability to exercise social policy.
The Director General of the Ministry of Finance Giorgos Pantelis, responding to comments and questions from MPs, stated that the Ministry does not demonize the right to access justice. He added that the Non-Performing Loans (NPLs) that currently exist are mostly strategic defaulters for loans that have been granted for 20 years. The state, he said, has prepared a series of plans for vulnerable groups to be protected, while the Rent-to-Pay plan is being promoted, with a positive approach at EU level.
He also noted that they cannot provide a safety net for strategic defaulters at the expense of the state and consistent borrowers and taxpayers, while noting that these discussions, which are being held in the context of divestments, are worrying for rating agencies.
He added that they are considering possible changes for those who joined the Home Plan due to the increase in interest rates, which causes them a further burden, however, as he said, this must be approved by the Competition Authority of the European Commission.
He also mentioned that at the moment the NDEs, which are in the Cypriot economy either in the banks or in the credit acquisition companies, amount to 25 billion euros, i.e. 100% of the GDP.
On behalf of the Central Bank of Cyprus, Kleanthis Ioannidis stated, among other things, that there are no particular complaints from debtors against banks that they are not proceeding with restructuring. At the same time, responding to comments by MPs, he admitted that in the past there were bad practices on the part of banks that gave loans on the basis of the existence of collateral and not the primary ability to repay, something that has changed, noting that the majority of NPLs currently relate to that period and not the recent crisis.
On behalf of the Association of Credit Acquisition Companies, Anthi Exadachtylou said that in case a borrower brings to a company that manages his loan presumptions that he is categorized as vulnerable, the companies stop the sale and proceed to negotiate with him. He noted that companies prefer compromise solutions, since they have lower costs both for themselves and for the borrower. He added that it is easier to reach a settlement with a loan recovery company than with a bank, since they do not have the same risks that banks do.
< p class="text-paragraph">In his statements after the end of the Committee, the Chairman of the Committee, DIKO MP Chrysis Pantelidis stated that the party is waiting for the government's initiative and expressed the opinion that there should be an agreement between the legislative and executive authorities on the matter, so that create a safety net for those who need protection.
He expressed the view that the Rent-to-Pay plan, which is expected to be approved very soon in the next few days, combined with the government initiative, which has been made public and which is pending a decision by the Council of Ministers, constitutes a good safety net. He also reiterated DIKO's opinion on a possible new ESTIA project, with better terms, which can cover more citizens.
“I will not tire of repeating that the state's obligation it is they who should be focused on, that is, our fellow citizens who want to but cannot and not on any non-payer, strategic or not, or on anyone else who tries to take advantage of loopholes or ambiguities in the system”, he concluded.
In her statements, DISY Member of Parliament Savia Orfanidou stated that what was recorded in the Commission is the Government's clear disagreement with the coalition parties and AKEL. He added that the CBC as responsible for financial stability also disagrees with the proposals of these parties, while the Financial Commissioner noted that the long-term suspension of sales in the courts will be detrimental to borrowers. He added that in such a matter of capital importance they should finally decide what they want and the stability of the economy should not be compromised by such misunderstandings, as he described them.
He also mentioned that the DISY as a responsible political force will await the proposals of the Government, expressing the hope that they will address the valid concerns without endangering the economy.
AKEL Member of Parliament Andreas Kavkalias stated that the specific proposals of the law are the minimum corrections that must be made to change the distorting and voracious system of sales, as characterized by the Financial Commissioner. He added that the society, the borrowers, the Parliament expected the Government to submit proposals that would solve the problem, something that did not happen and on the contrary, the Government, as he said, continues to waste time in favor of banks and credit acquisition and loan management companies. He also said that it is a one-way street for the law proposals to be taken to the Plenary Session of the Parliament for final decisions.
ELAM MP Sotiris Ioannou stated that recourse to justice is an inalienable right of citizens and the proposed law submitted by ELAM together with other parties, gives the opportunity and possibility to every borrower to examine whether abusive clauses have been imposed on him, but also the final amount, which is owed to the banking system or the credit recovery company. ELAM's intention, he said, is to bring the proposal to the Plenary before it closes for the summer holidays, providing a real safety net for borrowers.
In his statements, the President of EDEK Marinos Sizopoulos stated that most of the issues raised today were proposals that EDEK tabled from 2015 to 2022 and the parties either voted against them, or repeatedly voted to postpone discussion of the specific proposals. These proposals, he added, include the special department in the provincial courts for priority discussion of borrowers' appeals, the procedure for restructuring NEDs, the determination of the objective value of mortgage loans and proposals for the protection of guarantors. He called on some parties to stop demagoguery, face the problems and curb any arbitrariness by financial institutions.
In his statements, the MP Ilias Myrianthous of EDEK stated that it is a fact that unfortunately since 2018 when the legislation was introduced to bypass the court in sales, the portfolios of banks and loan acquisition companies have not significantly reduced NEDs. He stated that the NED today is around 25 billion euros and of that 1.3 billion euros concerns the NED for the first residence, which he said will not lead to a collapse of the financial system if the proposed law, proposed by EDEK for the protection of the first home to settle the balance through the courts. He declared that EDEK was determined to proceed with the proposal until its vote.
Dipa MP Alekos Tryfonidis stated that the restoration of the right of the borrower to appeal to the court before the expropriation, it essentially tries to restore the balance between Banks, Credit Acquisition Companies and Management Companies on the one hand, and borrowers on the other.
He added that the Financial Commissioner himself reported last week on a large number of foreclosures and that in a sample, albeit a small one, of the cases his Office examines, 43% show illegal charges and abusive clauses.
He also said that the expected submission of the Government Bill for the creation of a special jurisdiction in the District Courts to hear cases of a financial nature, in essence, he finds them in agreement and that the proposed law they are co-signing is not in conflict with the Government Bill.
At the same time he said that the simultaneous application of the two Legislations, entertains the concerns, expressed last week, mainly by the Ministry of Finance, that a huge number of cases will be brought to the courts.
The Environmentalist MP Stavros Papadouris expressed satisfaction that it was accepted by everyone that there is a distortion in the specific legislative framework, describing it as tragic that the borrower is not given the opportunity to appeal to justice and that there is no intention on the part of the authorities to change the framework. He added that the Financial Commissioner will propose in the next few days some steps to prevent the joint proposal from going ahead. He expressed the will to proceed with the proposed law before the closing of Parliament.
At the same time, he referred to a recent decision of the Court of Justice of the European Union which clarifies that the inalienable right of recourse to justice is above concern for the stability of the financial system.
The representative of the Active Movement, Lefteris Georgiou, said that the Central Bank, the banks and the Prosecutor's Office are unscrupulous and they operate as a cartel and no one has taken responsibility for the situation with the NEDs. He added that 20,000 citizens are currently at risk of being left on the street and wondered who would take responsibility for them.