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EC rejects foreclosures laws

The foreclosures laws passed by the Cyprus parliament last Saturday are incompatible with the requirements of the Memorandum of Understanding (MoU), according to a European Commission spokesman.

EC rejects foreclosures lawsTHE EUROPEAN Commission said today that the additional laws passed by the Parliament of Cyprus regarding foreclosures are not compatible with the requirements of the Memorandum of Understanding (MoU).

“The Commission will brief ministers at the Eurogroup on Friday on the latest state of play concerning the Cypriot economic adjustment programme”, European Commission spokesperson for economic and monetary affairs, Simon O’Connor said in his statement.

“While a detailed assessment is still ongoing, it appears clear that parts of the legislation voted through last Saturday, together with the foreclosures bill, are not compatible with the requirements of the MoU in this important policy area”.

“We remain in close contact with the Cypriot authorities on this matter and are looking forward to hearing from them how they plan to proceed”, he concluded.

The controversial foreclosures bill was passed by 47 votes at a plenary session of the house on Saturday.

Earlier today, President Anastasiades announced that four of the six bills voted by the House last Saturday limiting the scope of the foreclosures bill have been found to conflict with the constitution of Cyprus and have been referred to the Supreme Court for a ruling,

Speaking to the Cyprus Mail a former judge said: “The troika wanted us to enact a single law on foreclosures and be done with it, and we ended up churning out 14 bills. This is behaviour you’d expect from a Third World country. If you were a creditor, and the borrower was the one attaching strings, would you lend them money?”

Readers' comments

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  • Richard says:

    I don’t know where some on this discussion thread are obtaining their data from regarding those who can vs those can’t pay loans – but as I REPEATEDLY stated for some years now – the lenders have not acted in a fair way – so how anyone can take the moral high ground here is almost laughable.

    Many on this forum have wanted to re-negotiate fairly with the banks but have not been able to do so. I know of several people who approached their lenders only to be given ‘re-structured’ loans that were on WORSE TERMS than the original loans! I’d personally hardly refer that situation as ‘absurdly favourable’?

    WRT to “going after the large defaulters” – would these be the same defaulters who have ring-fenced all their assets abroad then? The same corrupt ones who have an extensive armoury of legal protection? Unless the E.U and the U.S treasury team with Interpol & the F.B.I who’s going to trawl the millions of shell companies for the tied-up assets of the corrupt?

    Lastly – the whole global banking system needs a re-think. I’m well aware it’s extremely difficult to get old dogs to learn new tricks – so I’m increasingly spending time with people who (like me) believe that fractional reserve banking has had it. It’s been open to the most flagrant abuse – and Cyprus is a shining example of just how badly wrong it can go.

    Most people on this earth are decent & reasonable. Most can also recognise corruption – even if it takes some longer than others. Most now recognise there needs to be a better system evolved & built. Without it – civil unrest is inevitable.

    We can all sit here & pontificate on this forum – but travel anywhere in the world & you see the same variations on the same themes.

  • demetri says:

    @Denton, NO tears shed for the defaulters, trust me (I am not a politician) I think it was greed that motivated people, I saw it everywhere, run down villages new luxury car in one driveway, opposite the road the neighbour had to have one too, made me cringe…

    As for NPLs and the banks not doing enough to restructure, well someone pretty close to me says they are chasing clients to provide all the required info in order help proceed with loan restructuring and the clients just refuse, these clients are then speedily moved on to the ‘recoveries’ dept, so yup MANY can pay but won’t and what happens to them serves them right!

  • Denton Mackrell says:

    @Demetri. Shedding an unconditional tear for the ‘vulnerable’ ignores two facts: (1) any person who takes out a loan or mortgage (voluntarily, remember) knows that that they are responsible for repaying it, up to and including liquidation of collateralized assets. That includes loss of home, always has done always will do.
    (2) as I pointed out in detail in my comment of Aug 17 @10.49 on the Property Circus Show thread, the so-called ‘vulnerable’ cannot be referred to as a job-lot in an undifferentiated way. Loan defaulters fall into two primary groups: non-performing and delinquent (hard core). Both these also fall into two groups: those who can pay but so far have failed to, and those who genuinely do not have the means to pay. As has been noted many times on this site and elsewhere, it appears that many of the largest defaulters DO have the means to pay without losing their primary residence, even if they have to liquidate other assets. The banks have also, for some time, been falling over backwards to offer absurdly favourable renegotiated repayment terms to NPL holders. Financial common-sense says that the banks are hardly likely to liquidate smaller NPL borrowings without first trying all the more benign ways out for the borrower. They are going to go after the really big defaulters, many of whom were major ringleaders in The Cyprus Property Scandal and contributors to the collapse of the economy.

  • demetri says:

    @Pete, too true remains to be seen if people get off their sofas and away from the TV (if they don’t lose them) and actually do something? personally I think a lot of the demands of the troika IMF gang are harsh…Cyprus received a 2 billion $ or Euro loan in the recent past without the demands made now by troika, could be that the Russian loans were in the day when the money was flowing but either way troika is not looking into what the social consequences of their demands are, laying off 1000’s of people in short periods of time cannot be a good thing. Now all the public sector employees are up in arms over the possibility of having their final salary taxed….nobody mentions the ageing population in Cyprus hence the increased need for pensions etc BUT if there are no young to work and contribute where will the money come from?

  • Pete says:

    Re Demetri’s post below, ” it is for the mistakes of the few that the many get punished…”

    It may also be said that it’s the many who keep the few in power, therefore the solution remains in the hands of the many.

  • demetri says:

    my previous post The laws past on Saturday

    The laws passed I meant, funny to see ‘them’ scurrying around trying now to minimize the repercussions of their supposedly ‘good for the people’ laws they passed…Nicos said in a speech yesterday how we must abide by all agreed with the troika in order to exit from the m.o.u asap….

    I fear though that there are vested interests eyeing up the natural resources off the south coast…interests that cannot be shaken off, mark my words the likes of the IMF and troika (ecb AKA DE) will bring the economy to it’s knees, and the only hope will be to sell off on the cheap even before the gas is extracted….

    Sad but the island is small and weak, and whilst many may say serve the Cypriots right, again it is for the mistakes of the few that the many get punished…

  • Pete says:

    It’s the old, old story of Cyprus politicians concocting proposals they know full well are totally unacceptable and thus Troika and the EU will be seen as the bad guys.

  • demetri says:

    The laws past on Saturday were just for internal consumption, they wanted to take the moral highround and blatantly pass laws that would scupper the effectiveness of those outlined in the MoU….they knew these games would not pass unnoticed by the troika, and besides the next container load of money from the ECB will contain money for these hard working members of the house of representatives if am not mistaken…..shame the people in power care nothing for the future of this place or its people. I read somewhere power corrupt and fear of losing it corrupts even more, how true.

  • clive of Payia says:

    Still playing for time but we cannot be too far away now when, in order to get the next Tranche of Bailout, the whole corrupt business is thoroughly exposed at last and the legal actions can commence.

  • Stuart says:

    No surprise there then.

    Clause 1.25 of section ‘C’ of the 42-page updated Cyprus MoU is abundantly clear when it states that, quote: “The authorities commit NOT to introduce any further impediments to the seizure of assets pledged as collateral” unquote.

    The former judge could not have summed up the situation better in his comments to the Cyprus Mail. The Troika is getting increasingly fed up with being jerked around by the Cyprus authorities trying to move the goal posts or change the stadium.

    A ‘Third World’ country is the conclusion reached in these columns many times already which is a great pity when it could be just the opposite without all the prevailing fraud and corruption that has brought it to the verge of bankruptcy.

  • richard says:

    Cyprus should be kicked out of the European Union. The very fact that the Union is allowing this to happen screams in any ethical context that the Union should be dissolved.

    M.O.U this and regulations that.

    With an increased pressure from the US to hook up Europe – one thing will be clear. Ordinary decent people will be the losers – and the crooked at the top will scoop up all the spoils.

    Sadly it was ever thus…

  • scruffy says:

    There is much reference re the upcoming Insolvency Bill in the press and other media. It would appear to offer some protection. Perhaps I have missed something but does anyone have an idea what shape this protection will take.

    It certainly looks as though the foreclosure bill will now only go through in its original Troika format.

    That leaves many at the mercy of the crooked banks.
    Not a pretty prospect

  • Mike says:

    The former judge, paraphrased in the last paragraph, appears to be the only one who has grasped the essence and spirit of the MoU not to mention its seriousness. If all these antics were not so pitiful I’m sure Monty Python or Morecombe and Wise would use it as a comedy sketch.

    Do our representatives have no knowledge of the real situation around the rest of Europe. Are they unaware that there are hundreds of thousands of people throughout the EU being forced to work for salaries at a fraction of what they once earned, paying taxes but still losing their modest homes. There is no protection for them at averages of value nearer to €70 to €100K I would suggest. These people will find it difficult to swallow protection of residences up to values of €350K using their taxes which they can ill afford to pay for a nation that squandered their worth and continued spending far more than it could afford by buying junk bonds that no one else would touch. Priceless…..
    Put the Judge in charge and reinstate a degree of sanity to our leadership.

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