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Positive review from the troika

A joint statement released by the troika of Cyprus’ international lenders (EC, ECB and IMF) at the conclusion of their latest mission to Cyprus welcomed the continued progress being made.

Positive review from the troikaTHE European Commission, European Central Bank and International Monetary Fund issued the following statement on their latest mission to Cyprus on 8th May 2015:

“Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) visited Nicosia during April 28 to May 8 to review Cyprus’s economic reform programme.

“Cyprus’s programme aims to support the economic recovery and job creation by restoring financial sector stability, strengthening public finances, and implementing reforms to increase long-run growth.

“The teams welcomed the authorities’ continued progress on their reform programme, including the strong improvement in the public finances and the implementation of important reforms, including the recent adoption of modern insolvency and foreclosure legislation.

“This legislation is a critical step aiming at reducing the high level of non-performing loans, which is essential to restoring growth and job creation in Cyprus. Significant progress towards staff-level agreement on the review has been made and the teams look forward to a swift conclusion as soon as all elements of the insolvency and foreclosure framework are available.”

Before the next tranche of the bailout loan is released, two actions must be completed:

  • The Cyprus government has to approve the draft bills concerning the packaging and selling of loans to third parties. (The troika will examine the legislation in July.)
  • The Cyprus government has to resolve the problem of ‘hidden mortgages’ where those who bought property that the developer had previously mortgaged are unable to obtain its Title Deed because the developer has defaulted. (Interior minister Socratis Hasikos has stated that the government’s top priority is to protect all those people who paid up fully for their homes, or up to 80 per cent but are unable to get the title deed. Draft legislation is being vetted by the Attorney General’s office.)

It is anticipated that the next tranche of the bailout loan will be released by the end of June; the amount will be settled once the troika have completed examining the insolvency and foreclosure frameworks.

Readers' comments

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  • Nick says:

    Let us imagine just for one second that before 30 June 2015 the government not only concludes/refines legislation to overcome the ‘hidden mortgage’ problem, but gets it successfully through parliament. After all, miracles do happen.

    The government solution is very simple: It informs the banks to take a massive, king-size, hit on these mortgages and – just like that – Bob’s your uncle – the problem is solved!

    Everybody: government, Troika, 80% plus property purchase payers, developers et al are ecstatic, they are absolutely over the moon. Talk about being saved by the bell!

    Only one tiny fly in the ointment: The banks already know they had a big hand in causing the problem in the first place but how do the government then convince these same banks to go along with this financial “hit” solution? After all, the banks are independent from government and they will make their own commercial decisions.
    Or am I missing something?

  • Stuart says:

    Hi Nigel.

    Good to see that the Troika is holding the Cyprus government’s feet to the fire by withholding further tranches of the bail-out loan until it resolves the problem of ‘hidden mortgages’ but do you seriously believe this will be achieved by the end of June given the government’s woeful performance record in the past?

    How many of the original MoU targets have been completed on time so far and how many times have the goal posts been moved or the stadium changed to accommodate the dismal progress being made?

    I have now lost count of the number of revisions made to the MoU but each one has been accompanied by the Troika “welcoming the authorities’ continued progress on their reform programme”.

  • Steve R says:

    This should be so simple. If you have paid for your property in full then they should issue the deeds. Why do we find our-self having to do deals with the banks and the revenue over something we have paid for. If you buy a car and pay for it in full then you are given the log book. If Mitsubishi went bankrupt owing millions would the receiver write to every owner demanding money. If you didn’t pay then the log book would be taken away from you?

  • Mike says:

    I fear the troika will be interested in procedures being in place and able to be implemented. I do not think any kind of ‘fairness’ will be a consideration.

    Nigel’s three choices are equally as likely to be implemented as the government will be also looking to protect its major institutions and big business partners possibly before any protection afforded to us minions. Resolving the hidden mortgages issue will, I think, result in unprecedented levels of gobbledegook, smoke and mirrors and procrastination. It will be resisted at all costs (our costs of course).

  • Chris says:

    Nigel thanks for your comments on the supposed approval by Cyprus to pass the law to protect buyers who have purchased a property in full or up to 80% from a Developer that due to unforeseen circumstances the title Deeds have not been transferred to the buyer of the property.

    1- The question is if this law is finally passed does that mean the Developer will not be held accountable to settle any mortgage or debt held.

    2- If that is the case will the buyer ever obtain the title deeds in there name to be registered at the land register office as the legal owner not the Developer.

  • @Penny on 2015/05/11 at 7:05 pm – I hope the legislation will enable you () and everyone else) to get the deeds to the property you purchased back in 2003; we’ll have to be patient for a little longer until details of the bill are available.

  • @Gary on 2015/05/11 at 5:32 pm – The troika want the government to resolve the hidden mortgage problem – we’ll have to wait and see what’s in the bill.

  • Penny says:

    Hi Nigel

    We do not have our Title Deeds although they have been ready for the Developers collection from the Land Registry for the past three years due to his non payment of taxes and his outstanding personal bank loan. Our house was fully paid for when we purchased it in 2003. Do you think that given our scenario any new legislation will free up our Title Deeds in the foreseeable future as the emphasis seems to be on those cases with developers mortgages?

    Kind Regards
    Penny.

  • Gary says:

    Hi Nigel,

    Have you any view of what the Troika are pushing for as a resolution.

    Option 2 does not resolve the problem of non-performing loans (not adequately anyway) as most purchasers will not be in a position to pay a share of the developers debt (and why should they?). So I cannot see the Troika supporting option 2.

    Option 3 implies that proper Title will never pass onto the purchaser. So again, surely this will not be satisfactory to the Troika?

    Rgrds,

    Gary

  • @Gary on 2015/05/11 at 3:26 pm – The Interior Minister has hinted at what the legislation may contain – see Pledge to protect paid-up buyers.

    The banks could move the developer’s mortgages onto his company’s unsold properties.

    But I can see a problem if the value of the unsold property is less than the amount the developer owes. In this situation I can think of three choices:

    1. The banks take the hit as their reckless lending, lack of due diligence and stupidity caused the problem.

    2. Purchasers could be asked to contribute to the developer’s debt.

    3. Purchasers could live in the property until their demise, then it would revert to the bank.

    If the government went with option 2 or 3, I believe it would kill the property market – option 1 would help restore confidence

    (While they are at it, the government should include in the law that any other debts, including unpaid taxes, would also be moved onto the development company’s unsold properties. If repossessions of paid for homes are to be prevented, there is no advantage to preventing people from getting their deeds because of any other debts.)

  • Gary says:

    Hi Nigel,

    How do you see the second action unfolding and what criteria to you believe the Troika will apply to ensure it is met “The Cyprus government has to resolve the problem of ‘hidden mortgages’…”?

    Is it too optimistic to believe that the barrier of hidden mortgages will now be removed and purchasers can look forward to receiving their Title Deeds in due course (subject to normal fees/taxes)?

    If not, what complications do you see remaining and is this the end of the matter as far as the Troika is concerned?

    Thanks,

    Gary

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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