The Finance Minister told the Parliamentary Committee on Financial and Budgetary Affairs that there is no agreement between the Government and Cyprus’ lenders over the foreclosure legislation on mortgaged properties, Chairman of the Committee Nicolas Papadopoulos, has said.
Speaking after a meeting of the Committee with the Troika heads on Friday, at the Parliament, Papadopoulos said that Cyprus` international lenders insist on legislation allowing for foreclosures and private auctions of property being driven to the Parliament for approval the soonest.
“The Finance Minister told us that so far there is no agreement on the foreclosure legislation” he said, but added that “this does not mean that there is no chance for an agreement to be reached in the coming days”.
However he said that this legislation could become a precondition for the disbursement of the sixth bailout tranche.
At the meeting, Cyprus` lenders noted, according to Papadopoulos, that “there are positive developments and the implementation of the Memorandum is progressing well”.
However, speaking on behalf of his party DIKO, he noted the high percentage of non performing loans (NPLs), the lack of liquidity in the banking sector, as well as the high unemployment rate.
“We must find ways to deal with the high percentage of non performing loans” he said, pointing out that the implementation of the part of the Memorandum concerning the banking sector is not progressing well.
The problems will not be solved through foreclosures, he noted.
AKEL MP Stavros Evagorou said the Parliament should be given sufficient time to discuss the legislation, adding that his party intends to put before the Parliament a bill they had previously proposed with the socialist party EDEK on the protection of primary residence.
EDEK MP Nicos Nicolaides warned that initiating foreclosure of mortgaged properties will backfire as it will increase bad debts in the banks.
NPLs must not be addressed all in the same way, he said, noting that massive foreclosures will lead to a reduction of real estate prices, a drop in the values of mortgages and an increase in the bad debts of the banks, in turn.
“We need measures and procedures that will give the banks tools to deal with big debtors and those who can repay their loans but are not doing so, protecting at the same time vulnerable borrowers,” he added.
European Party (EVROKO) President and MP Demetris Syllouris said that the Central Bank, the banks and the financial ombudsman, must begin a dialogue with the Parliament if they want it to approve the legislation, noting that before the banks are given the foreclosure tool, they must first review their practices and put their house in order.
Green Party MP Giorgos Perdikis said that the Troika refused to change the definition of NPLs, as required by the MPs during the meeting.
He said that the Government and the Parliament must insist on the foreclosure legislation to target those who can repay their loans but are not doing so.
The Troika mission arrived in Cyprus on Monday evening. They are expected according to an initial time frame to have meetings with local stakeholders until July 22 and to conclude their review by July 25.
So far the country has had four positive programme reviews.
