Tough battle in the Plenary Session of the Parliament with the discussion of three proposals and all possibilities open
In the midst of “disturbance” it is possible that in the coming days we will see a note from the Evaluation Houses that will judge the Parliament's intentions to change the framework.
By Panagiotis Rougalas
The three proposals that will be discussed on Thursday in the last plenary session of the House of Representatives before the summer holidays, three but also the scenarios for the outcome of the sales context.
In the Plenary Session, the government's bill for the creation of a special jurisdiction court that will hear sales cases for first residences worth up to 350 thousand euros, the AKEL proposal for a law that gives the debtor and other interested persons the right to appeal to a court for suspension property sale procedures when there is a dispute over the amount owed, and finally, the EDEK law proposal related to the value of the mortgaged property and its sale price. The first proposal, the so-called “government” one for the creation of a court of special jurisdiction, is likely to find the convergences from the MPs to be voted on, while the fate of the third proposal is not clear if it is widely accepted. The second proposal, the “controversial” one of AKEL, is the proposal that has created the whole “problem”, with the bankers, the government, the central bank of Cyprus and the credit acquisition companies having stated many times that, if passed, it will have negative consequences for the economy. With the AKEL law proposal, which is also co-signed by the MPs of DIKO, EDEK, DIPA and Ecologos, all borrowers are covered and not only those who have a first residence of up to 350 thousand euros. Thus, each borrower will be given the opportunity to go to court, the foreclosure process will be stopped and the court will have to consider the borrower's request to continue the process. The decision of the courts will be binding and thus the process will proceed based on the remainder decided by the court.
EDEK's proposal finally, even if it does not seem to pass at first sight, it cannot be ruled out that it will pass and function as an “exchange product”.
There are three scenarios for AKEL's “controversial” proposal, which may be voted on next Thursday. Either it will be voted on and will automatically bring new data on the context of divestments in Cyprus in general, either it will be voted on and President Christodoulidis will refer it, or it will not be voted on and the discussion on divestments will proceed after the opening of the House of Representatives by the summer holidays. It is recalled that banks and credit acquisition companies have suspended sales until October 2023, but only for cases of first residence and property value up to 350 thousand euros. The tip of the spear is AKEL's proposal, which is also co-signed by other parties, and as it appears from the discussions the MPs had with the Government in the last few days, they will hardly vote for it. No one knows what will happen in Thursday's Plenary and the ferment will continue until the last minute.
There is also an asterisk. EDEK's proposal ultimately, even if it does not seem to pass at first sight, it cannot be ruled out that it will be the one that will pass and will function as an “exchange product” to prevent AKEL's proposal from passing. With the proposal of Mr. Marinos Sizopoulos, the mortgage debtor will be granted the right to request a mortgage property appraisal based on the procedure provided for in the said law, if he has reasonable grounds to believe that in the event of a new appraisal, the value of the mortgage property will be higher than the value he accepted when entering into the original contract.
Note from Houses?
In the midst of “disturbance” in the Cypriot system with ramifications for the Cypriot economy that has been discussed for several weeks now, it is not excluded that in the coming days we will see a note from the Evaluation Houses that will judge the Parliament's intentions to change the context of sales once again. It is not the first time they will do this, after all, since they have mentioned in several reports that the high NED index may be the biggest vulnerability of the Cyprus economy.
On the contrary, a good handling of the whole issue and a real strengthening of the divestment framework with the comfort of time given up to October 2023, will probably open a new horizon for the economy. If they see that the divestment framework has been upgraded, rather than simply changed, the evaluations that follow may be to the benefit of the country and the economy in general.
The Special Court's
Be that as it may, the creation of a special court is a step in the right direction for the Cypriot economy and borrowers. What does the bill include? The purpose of the bill is to regulate the adjudication of disputes that arise between a borrower/guarantor/collateral provider, with a creditor, regarding a credit facility secured by a principal residence worth up to 350,000 euros. By direction of the Supreme Court, a presiding judge of a District Court may, with the approval of the Supreme Court, appoint a number of judges to hear cases relating to the following two. First, disputes that arise between the borrower/guarantor/collateral provider with a creditor regarding the debit balance of the credit facility secured by a principal residence of an estimated value of up to 350 thousand euros, which is late or overdue and which has been terminated, as well as any other difference between the above persons regarding the credit facility in question, the related guarantees and/or collateral. That is, disputes concerning a credit facility secured by a main residence with an estimated value of up to 350 thousand euros in relation to overdrafts and/or abusive clauses are included.
Secondly, sale of a mortgaged property, in accordance with the provisions of the law of transfer and mortgage.
The ultimate purpose of regulating the adjudication of specific cases, in the context of provincial courts, is to contribute to achieving a further reduction of non-performing loans (NPLs), while ensuring the rights of borrowers, with significant benefits for financial stability and economy.
