Heaps of legislative proposals House Finance Committee on the suspension of sales
MPs and Financial Commissioner spoke of a “nomenclature” in the Ministry of Finance.
With a raft of legislative proposals and awaiting the tabling of a government bill to create a court of special jurisdiction to deal with the sale of first homes, the Parliamentary Committee on Finance has returned vigorously to the debate on the subject of the moratorium on sales.
The session was characterized by tensions, with MPs and the Financial Commissioner Pavlos Ioannou talking about a “nomenclature” in the Ministry of Finance that expresses different positions from the current Minister of Finance and the Government
The Ministry of Finance and the Central Bank of Cyprus expressed their disagreement with the majority of the 19 proposals for a law submitted by MPs to the Committee on the issue of the sale of mortgaged properties.
The representatives of the Ministry of Finance and the Central Bank of Cyprus said that they agree with a proposal for a law tabled by DISY and DIKO MPs which provides that together with the notice sent to the mortgage lender, in case of default or demand for payment of mortgage debt, it is also sent standardized detailed information on loan progress to borrowers, guarantors and collateral providers. The aim is to strengthen transparency in relation to the requirements of licensed credit institutions and facilitate restructuring and loan adjustment procedures. However, the Ministry of Finance indicated that there should be some further processing.
At the same time, the representative of the CBC said that he is positive about AKEL's law proposal, according to which in the event that a mortgage debtor chooses to proceed with the exchange of a mortgaged property in return for repayment of a debt to a mortgage lender and the property constitutes a main residence or business premises, as an exchange value to the market value resulting from the existing appraisal process is set instead of the forced sale value of the property usually set by the banks. However, as he said, it should be discussed.
On behalf of the Ministry of Finance, the Financial Director of the Financial Services Directorate, Avgi Chrysostomou Lapathiotis, stated, among other things, that the sale process starts for many more cases and number of properties than those that end up at auction. He added that because the auction process starts there is increased pressure, which makes it an effective tool against Non-Performing Loans (NPLs) and said it is very important to maintain it. He noted that the position of the European Commission is that Cyprus should refrain from taking measures that undermine the payment culture, while he added that in a pan-European survey carried out before 2018 and the change in the divestment framework, Cyprus had a very low performance in dealing with of the NED.
In relation to the procedure regarding the Rent Against Installment Plan, Ms. Lapathioti mentioned that the process before the Commission was difficult because he had to be convinced of its social character. He added that with interventions at the highest level, they are trying to overcome the doubts of the Commission and there is a positive development. However, as he said, he cannot say when the Commission will respond.
At that point, AKEL Member of Parliament Aristos Damianou criticized the Ministry of Finance for not being able to effectively negotiate with the Government on the issue, since under previous ministers “there was a mockery of the European Commission” on a host of issues.
Ms. Lapathioti replied that the Ministry of Finance has nothing to hide regarding the Rent for Installment plan.
The President of the Commission Christiana Erotokritou stated that in the last 45 days the progress made by the current Minister of Finance is spectacular.
Expansion of powers of the Financial Commissioner
In relation to a proposal to expand the powers of the Financial Commissioner, Ms. Lapathiotis stated that there is a European directive for its operation as a dispute resolution body, which does not prohibit the binding nature of its decisions. However, as he said, if there is binding for the Financial Commissioner, it should also be for other dispute resolution bodies.
Financial Commissioner Pavlos Ioannou said that he distinguishes between the “nomenclature of the Ministry of Finance” and the Minister of Finance himself. He added that the problem with out-of-court dispute management lies in the fact that the state does not decide to turn the body into an independent agency.
He added that it is not easy to make its decisions binding on technical, institutional and operational reasons.
DIPA MP Alekos Tryfonidis strongly asked the Commissioner to state his views and why the issue is not progressing.
The Commissioner said that sooner or later the Commissioner's decisions will be binding. He requested that the Commissioner be strengthened in terms of human resources, while he requested that there be a directive from the Government so that KEDIPES and the Housing Financing Organization accept the Commissioner's decisions as binding.
In her statements after the Commission, the Director of the Association for the Protection of Bank Borrowers, Jenny Papacharalambous, said that after the end of the last suspension of auctions, the association receives dozens of complaints about receiving letters for the sale of a main residence and a small business premises.
On behalf of the “Energo” Movement, Lefteris Georgiou spoke of a theater of the absurd in the Commission, with the Ministry of Finance not knowing where it is stepping and saying the same things without providing a solution. At the same time, he added, “it smells like gunpowder outside” and families are on the street. He added that there are families who are in hotels and the state pays them 160 euros a night. He called on the President of the Republic and the MPs to find immediate solutions.
Placements of MPs
The President of the Committee, MP of DIKO Christiana Erotokritou said that the proposals from the parties concern borrowers' access to justice and the suspension of sales.
At the same time, he expressed particular satisfaction for the preparation of a bill for the creation of a special jurisdiction within the existing jurisdiction of the provincial courts, to examine the procedure for the sale of properties concerning the first residence up to 350,000 euros. He expressed the view that the state should protect vulnerable borrowers and groups and said that they cannot legislate horizontally for everyone.
He added that the relevant bill on the special jurisdiction is a step in the right direction, it is in the Ministry of Justice and expressed the hope that by July the bill will be able to come before the Parliament to be voted on and put into effect immediately.
He also said that it is clear that a suspension of sales is not possible at this point and cannot be a permanent solution to the borrowers' problems.
DISY MP Savia Orfanidou said that DISY does not consider it a responsible act to adopt any proposal with which the Ministry of Finance and the competent Supervisory Authority disagree.
“After all, such a serious issue that concerns the entire society should not be regulated by piecemeal proposals of law but in cooperation with the competent institutional bodies. As we have already stated, we will await the final and comprehensive proposals of the Christodoulidis Government in cooperation with the Central Bank”, he said.
He noted that the DISY Law Proposal which was submitted jointly with DIKO and received a positive approach from the authorities, it aims at full transparency, it will oblige banks and credit acquisition companies in every letter they send to the borrower to list a full analysis of the evolution of the loan.
AKEL MP Aristos Damianou said that if he were to headline today's session it would be “unfortunately, nothing younger than the government camp”. He added that the Ministry responded negatively to the large majority of the proposed laws, while the “Rent for Installment” Plan, following pressure from AKEL, admitted that it faces approval problems at the European level. Regarding similar arrangements related to the Judiciary Act, he said that they were told that a dialogue between the Executive and the Judiciary has started, “so, nothing new”.
He added that AKEL considers the restoration of borrowers' and guarantors' unhindered access to justice as a matter of course, but also the creation of an effective social policy for housing, which also includes this dimension of sales, i.e. evicting people.< /p>
The deputy of DIKO Zacharias Koulias spoke of a “nomenclature in the Ministry of Finance that does not sweat its ear”, while the philosophy of the Minister of Finance and the President of the Republic are completely opposite. It is, as he said, as if the Government has not changed. He reported that the “ministerial nomenclature” told them that under the pretext of the delayed land registry system and the delay of justice, the legislation was changed in 2018 against the citizens, instead of fixing the system. He added that they have not yet decided on what should be done with the abusive charges and said that the Ministry of Finance must change its attitude. Ministry in all of the law proposals except for a typical proposal of DISY and DIKO. He said that the party has the political will to continue the discussion on divestments and take its proposals to the Plenary, regardless of the biased attitude of the Ministry of Finance towards anything that comes to change the context of divestments.
EDEK MP Ilias Myrianthous spoke of a theater of the absurd, in which the Ministry of Finance justified unjustified actions with the support of the CBC. He added that his party has asked with legislative proposals to restore the right to appeal to justice in the matter of expropriations and is calling for the establishment of a special court for problems between borrowers and banks.
He called on the Minister of Finance to appoint his own officials around the specific issue, since the officials of the Ministry tell them “the same and the same” and approach the issue “one-sidedly” without taking into account the peculiarities of the Republic of Cyprus and aiming at the issue to be approached with sensitivity and to democratically protect the citizen.
Dipa – Cooperation MP Alekos Tryfonidis welcomed the proposal of the Minister of Finance for the creation of the special court. He called on all relevant agencies to work quickly for the creation of this court. He added that they are calling for an extension of the Rent-to-Pay scheme to reach the middle class and people who are already working. He also noted the need to expand the powers of the Financial Commissioner and to reinforce him with staff. He also said that if the violation of the code of conduct of the CBC for restructurings continues, they will proceed with its institutionalization so that it is mandatory for everyone to apply it.