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Protection for crisis-stricken homeowners

Crisis-stricken homeowners will be offered protection against foreclosure under the provisions of the fourth bill of the ‘insolvency framework’, which has been handed to political parties for their views.

Protection for crisis-stricken homeownersTHE FOURTH bill that forms the so-called insolvency framework affords protection to crisis-stricken homeowners whose homes are worth up to €250,000 and the amount they borrowed must not exceed €300,000.

The bill affords protection from foreclosure to individuals who meet certain criteria.

To be eligible, a borrower must prove they lost at least 25 per cent of their income because of the economic crisis no earlier than two years before filing an application for a personal repayment scheme.

The total of their loans must not exceed €300,000 and their primary residence must have a market value of up to €250,000.

The bill includes strict criteria that define who is exempted from repaying a debt as part of the scheme.

According to the bill, a debtor will not be exempted unless, among others, they have up to €5,000 in debt, net disposable monthly income of €100 or less, and €400 worth of assets.

The bill has been handed over to political parties for their views.

It is the fourth of five bills that constitute the insolvency framework, legislation that among others, aims to afford protection to vulnerable groups.

Two have already been submitted to parliament and another one, approved by the cabinet on Tuesday, is on its way.

The insolvency framework was meant to come into force at the beginning of the New Year to coincide with the enforcement of the foreclosures law.

The delay provided opposition parties with the opportunity to suspend the law in what observers described as a populist stunt that ultimately hurt Cyprus’ credibility.

Despite government pleas, they suspended the law until the end of January, claiming they did it to protect vulnerable groups.

Parties said it was the government’s fault for delaying the preparation of the insolvency framework.

The vote to suspend came a couple of days after lenders released some €350 million as part of the island’s bailout.

That money had been withheld in September after opposition parties pulled an equally unnecessary stunt, passing laws that limited the scope of the foreclosures legislation.

The president referred the laws to the Supreme Court, which ruled them unconstitutional, opening the way for disbursement of the tranche.

But an additional €85 million has been withheld by the International Monetary Fund following the suspension last Thursday.

Anastasiades said on Tuesday that he planned to refer the suspension to the Supreme Court.

Readers' comments

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  • mavros kaliteros says:

    I lived in Sudan,Congo and S.Africa most of my life. My life savings were stolen from Laiki and the Government for bail-out.
    Bastards, bandits, thieves and cheats is the game from top all the way down.

    As long as they live they will rip everyone off from British, Arabs, Lebanese and now Chinese.

    I pray daily that my country of birth ” Cyprus” goes to hell in more ways than one.

    No one should even consider buying any property there

  • @Andrew on 2014/12/28 at 7:48 pm – Property development companies are owned by shareholders or partners and are responsible for everything they do and their finances are separate from its owners personal finances. If it’s a limited company its members will own shares in the company and it will be run by a board of directors (who may or may not own shares). A company is not owned by an individual.

  • Andrew says:

    There appears to be a clear distinction between a “Developers” personal assets and his business assets. Yet it seems the differentiation comes only from lawyer speak. Innocent home buyers lose out big time when they receive shoddy legal advice , while often newly formed, companies are protected

    Wouldn’t it make interesting reading to discover where these developers personal assets came from. What personal assets did these people have before they acquired THEIR, now non performing, loans.

    Did these developers have any real personal assets before they miraculously became developers and obtained loans to build homes.

    Surely somewhere along the line there has been widespread abuse of company law.

  • UBoat says:

    @Nigel

    So we actually only rent our plots on long or short term then ? But we where all lead to believe we would actually own them By now…. And have been deceived by so called lawyers who where to protect our interests when we engaged them in our buying process ?

    I hear my Solicitor now “Yes Yes Of course you will have your Title within 2 years, It is standard”

    If only I knew then …… Ha Ha Ha !

    That was 13 years ago and I still have not got it and no sign of it or me ever becoming the LEGAL owner of my plot any time soon ….

    So on we go paying for something I thought I would own by now like most of us.

  • @Pippa on 2014/12/28 at 11:00 am – Unless the directors of a property development company have guaranteed their company’s debts their personal assets cannot be touched.

    A director’s personal assets are separate from their company’s assets.

  • Pippa says:

    @Nigel,

    Exactly, that is how it happens in any reasonable society, just not here in Cyprus, where the buyer seems to take on the developers debts as well as his own. I cannot understand why a developers personal assets cannot be seized before goods he has already received money for. Heaven help Cyprus as it seems unable to help itself.

  • @Pippa on 2014/12/27 at 3:33 pm – We bought our first home in the UK off-plan. Unlike buying off-plan in Cyprus we did not have to make stage payments to the developer as the company financed the construction using its own resources (and those of its lenders). When the property was delivered, some 9 months later, the building society that loaned us the mortgage used some of the money advanced to repay the developer’s debt and the balance went to the developer.

    Completion, the transfer of ownership to our names, occurred at the same time and a month later we started repaying our mortgage to the building society.

    When we sold the property the money was held by our solicitor. Some of this he used to repay the building society our outstanding mortgage, some to pay his fees, and the remainder went into our bank account.

  • Pippa says:

    Surely the common sense thing, but then this is Cyprus, is for all properties that have been paid for in full are given clean title deeds and those mortgaged properties, where the mortgages are being fully serviced the title deeds are given to the mortgagee (I assume the bank). Isn’t this what happens in all civilised countries. These properties should never be included in the assets of the developer. The law must be changed to allow the personal possessions of the developer, yes even the BMW to be seized. What the politicians fail to realise is that there will never be any confidence in any property market on RoC while the present stupid system continues.

  • Andrew says:

    @Nigel December 26, 2014 at 8:01 pm.

    These are not normal circumstances though. This is widespread collusion between Banks, Developers and all overseen by Lawyers.

    Innocent home buyers have been duped. The whole lot of those responsible for this debacle should have the prospect of their personal assets being seized. Then we might see some changes.

  • @Uboat on 2014/12/27 at 11:48 am – No – developers cannot borrow money on land/property they do not own. As title to the property is registered in their name, they are its legal owner and can use it as collateral against loans/mortgages.

  • Uboat says:

    So as I see it then ….. The developers can borrow money on land and property that they don’t own, But still hold the title to many years (in lots of cases) after the initial sale, hide personal money and assets where ever. Plead poverty and still walk free with their heads held high…..

    Is it me or can anyone else see what’s totally wrong here ….???

    Its disgusting that this continues and all the EU are doing is helping then to smooth over the gaping cracks and continue to take money…… Some pay role that EU and Troika have ?

    What’s more the banks as you say are now trying to get US the innocent buyers to pay all or part of the developers debt…..(I’ll flatten my property long before that happens) Well I for one want a share in his personal assets that he has hidden. What a state to be in they are not even trying to hide it any more, Its outrageous.

  • @Pippa on 2014/12/26 at 5:49 pm – We don’t yet know whether homes that have been bought and paid for, but which are burdened by a developer’s ‘hidden’ mortgage will be seized.

    As it stood in September the Foreclosures Bill forbade foreclosing on a property that had been sold but which was burdened by a mortgage, providing that the purchaser had paid at least 80% of its purchase price.

    But as the opposition parties are now delaying the implementation of the law, it gives the banks the opportunity to apply pressure on those affected to contribute to repaying the developer’s debt.

    (Unfortunately if a company goes belly-up the personal assets of its directors cannot be seized under normal circumstances.)

  • Pippa says:

    Let me get this right. I have paid in full for my primary property therefore owe no money, however if my developer has a mortgage, ( I have no doubt he has) my primary property can be seized as it is his asset and not HIS primary property? When will the Troika actually get to grips with this ridiculous so called government and it load of numb skulls?

  • Stuart says:

    @ UBoat. The Troika CAN see through it. They even held a long meeting with Nigel Howarth to confirm their impressions and have now, at last, started to withhold funding from Cyprus.

    There are, however, certain political restraints imposed by the EU which make the situation very elastic. Nevertheless, there is no infinite modulus of elasticity and the Troika will eventually snap back, particularly if there is any repetition of the sort of publicity stunt the opposition parties have recently pulled.

    I suggest that we will see a hardening of the Troika’s attitude in 2015. Already they are considering postponing their next visit and only Cyprus is to blame for the dire straits in which it finds itself.

    Meanwhile, a very happy New Year to you and all contributors.

  • Manilal Shah says:

    I think you have to blame EU and IMF. They paid 350 Million before the insolvency Bill was passed and signed. EU should withdraw all support and give notice to Cyprus that unless all condition are met within three Months they will be thrown out of EU. EU have allowed this to continue for last four/five years.

    Manilal Shah

  • UBoat says:

    Good at least some people will get some help.

    It seems to me though that you would have to be quite low to be able to get the help. It does not seem to offer any protection at all for any one who resides outside of Cyprus but has property there and is also struggling.

    Like you say no mention of property which is almost worthless due to no title deeds and developer loans on the property.

    And why Troika cant see through the smoke and mirrors created by the government is beyond me ?

    Happy Christmas to you all.

  • Denton Mackrell says:

    The fool and his paradise are never easily parted. Cyprus – the Island of Delusions, where water runs uphill, debts must never be repaid, taxes must be paid by no one (not even ‘the little people’), house prices will rise for ever, foreign tourists numbers increase as they feel compelled to come despite poor value for money, the offshore gas bonanza will see every Cypriot with a Rolls Royce and his wife adorned with minks and diamonds. Oh, and since other countries, the EU, the IMF are all to blame for all of Cyprus’s problems, then it is only right that they should provide a never-ending cornu copia of gifted money to fund the feckless, self-indulgent lifestyle of the population.

    A colleague has recently presented the keynote paper to the International Congress of Applied Psychology. This year it was in Paris. I’m going to recommend that the ICAP holds its next one in Cyprus and considers setting up a permanent centre to study this most peculiar of societies with its uniquely high concentrations of delusional states, personality disorders and dysfunctional relationships.

  • Mike says:

    Steve R – I think you have hit the nail on the head. What in heavens name must the majority in France, Spain, Ireland, Romania, UK, Malta and Romania be thinking. All those populations are struggling to live and pay their bills, have homes valued at far less than the silly prices applied to those in Cyprus, (other than those living in Capitals or major Cities) and have no such protection. If they borrow they have to repay or sell up and repay or be repossessed in order for the lender to recoup their money. I’m sure nearly everyone in each of those countries would love to borrow up to €300K in the knowledge that their home would be protected if they fail to keep up payments as agreed. Is it any wonder that the incidents of attempted fraud are so high. We have obviously never considered the social, moral and financial costs of creating a dependant and expectant society.

    We have to learn the difference between helping the vulnerable to support themselves, with government assistance, and protecting those who claim to be vulnerable which will include many who are not.

  • Steve R says:

    Let me get this right. Troika released 350 million Euro to the Cyprus government earlier in the year. A condition of this loan was that Cyprus put into place certain legislation, which they duly obliged. A few days after the release of these funds Cyprus withdrew their part of the deal. Money in the bank and a withdrawal on their part of the deal. Does Cyprus believe they will be able to pull this stunt again. There are countries within the EU who are a lot worse off than Cyprus who have been made to contribute. What must they be thinking and why have the Troika allowed this to happen

  • Peter Davis says:

    I don’t understand the Cypriot mentality about the value of the home.

    I have a Cypriot friend who lost his job two years ago, (an accountant who worked at one of the large hotel chains) he’s aged 55 and will never work again. He is destitute, but with a family house worth over €200,000.

    As a result of the value of his house he is denied any state assistance.

    Maybe people with a house of €250,000 don’t deserve help, whilst those with a home of €249,000 are less well off?

    Do these people think you can eat bricks and mortar, because you surely can’t sell them at the moment.

  • Andrew says:

    Wonderful. It would have been reassuring to see another strict criterion. One which states that a purchaser will not lose his or her home due to any undisclosed developer mortgage.

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