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19th March 2024
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HomeNewsMPs focus on foreclosure regulations

MPs focus on foreclosure regulations

foreclosure regulationsMPS ON Monday continued discussion of the regulations governing the auctioning of properties in foreclosure, with the aim of voting them into law at Thursday’s House plenum.

Passage of the ordinances will enable new repossession laws, cleared in April after months of political wrangling, to come into force.

In turn, the implementation of effective foreclosures legislation is a condition set by international creditors for completing their latest review of Cyprus’ bailout programme. This would pave the way for the resumption of bailout payments, as well as signal the island’s eligibility for the European Central Bank’s borrowing programme known as Quantitative Easing.

As they stand, the government ordinances on foreclosures – which require the nod from parliament – provide that auctions will take place from Monday through Friday, 9am to 5pm, except for public holidays.

As reported by CyBC, auctions will be held at designated premises, one in each district, to be selected by the interior ministry or the banks. The process will be streamed live online, with auctioneers picked at random by computer.

The principal debtor or guarantor will be given the opportunity to pay the outstanding amount before the auctioneer starts taking bids.

Additionally, auctioneers are not permitted to sell more immovable properties than what are needed to cover a debt. Where multiple properties of a debtor are being auctioned off, the last property to be sold will be the primary residence.

Successful bidders are required to cover all auction costs as well as fees for registering a property in their name. The winning bidder must immediately pay 20 per cent of the sale amount, with the remainder paid over the next 20 days.

Under the same regulations, auctioneers’ fees will not exceed 0.1 per cent on the sale price, for properties under €100,000. For properties worth up to €500,000, the fee is set at no more than 0.25 per cent, excluding the first €100,000. In any case, the fee must not exceed €300.

During the same joint session on Monday, the House finance and interior committees also debated a bill, drafted by the Central Bank (CBC) and concerning the sale and transfer of bank loans to third parties.

Opposition MPs have raised a red flag that debts might be sold off to financial companies controlled by Turkish interests.

CBC officials reassured deputies the bill features a number of safeguards against this.

Back in January, parliament passed an amendment to the Banking Law (1997 to 2013), inserting a clause by which banks licensed in Cyprus may not sell a loan portfolio to credit institutions – such as hedge funds – operating here but licensed elsewhere.

As the law stands, banks may dispose of loans (in whole or in part) only with credit institutions that have been licensed in the Republic.

The ban applies until June 26, by which time the government hopes to finalise and table the CBC bill, which needs to be green-lighted by the troika of lenders.

Yiangos Demetriou, head of the CBC’s bank supervision and regulation, told MPs that financial companies licensed in Cyprus would also be required to be based here in order to buy up loans from banks.

Additionally, the companies would come under full CBC supervision, and their owners subject to ‘suitability control’.

According to Demetriou, the CBC was now waiting for the troika’s feedback on these clauses.

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9 COMMENTS

  1. Dear all, I find it sad, and typical of people who aren’t affected to see things as they aren’t!!!

    The reality is that Cyprus doesn’t have council housing, hence the law which stood disallowing repossession of primary residential homes.

    And typical it’s mainly foreigners moaning and growning, where will these people go after the hedge funds buy up my Island. Be serious. Cyprus was to good to be true to the people involved in its buyout years ago, the banksters, other governments including the so called European Union, some union, of crooks and gangsters.

    • @Deanna on 2015/05/13 at 5:43 pm – No need to apologise Deanna, I can understand how angry many people are.

      Some of these ‘crooks’ have made millions by playing the system to their advantage and cheating their customers – the laws protecting buyers are totally inadequate and less useful than a third eyebrow.

  2. Where the ‘small’ developer has a debt but no unsold properties, all (few) properties have either been paid for in full or have fully serviced mortgages, what will they sell first?

  3. Quote ” Where multiple properties of a debtor are being auctioned off, the last property to be sold will be the primary residence.”

    So the only person to remain ‘untouched’ in the case of a large developer, will be said developer who gets to keep his own home.

    Well I think his own home should be the first to be auctioned.

    • @Deanna on 2015/05/13 at 11:42 am – The aim of the legislation is to reduce the astronomical amount of NPLs. Unsold properties will be the first to be auctioned. But a developer’s residence will not be a company asset, it will be a personal one and would therefore not be liable for repossession.

      In cases where an individual owns a number of properties, his primary residence will be the last one to be sold, which is reasonable.

  4. I don’t see anything addressing the gargantuan issue of Swiss Franc mortgage, lets say “mis-selling” that has led to a whole army of people that will now have their properties sold off at auction. All because they couldn’t keep up there payments which either trebled or quadrupled. That’s fair !. It’s an utter farce.

  5. 1 : Additionally, auctioneers are not permitted to sell more immovable properties than what are needed to cover a debt. Where multiple properties of a debtor are being auctioned off, the last property to be sold will be the primary residence.

    Our developer has gone bankrupt and owes 100s of thousands of Euro. All the properties on the site are primary residences. How would they sort that out.

    2 : Under the same regulations, auctioneers’ fees will not exceed 0.1 per cent on the sale price, for properties under €100,000. For properties worth up to €500,000, the fee is set at no more than 0.25 per cent, excluding the first €100,000. In any case, the fee must not exceed €300.

    For the auctioneer to sort out all the documentation and sell the property they would need more than €300. I don’t think many auction houses would be interested

  6. One could say ‘about time too’ however that may be seen as insensitive to a minority. In the case of developers I see a stumbling block within the sentence “Successful bidders are required to cover all auction costs as well as fees for registering a property in their name”.

    If legislation is not in place, and I don’t believe it is, for transfer of title to be made at point of sale then the same old problem exists. I would be more than happy to buy a property, pay 20% and the balance within 20 days (at the right price) but only if I have registered title in my name on exchange of contract which will need to be at the time of handing over the cash with no ifs or buts, no promises, no smiling platitudes just printed, registered unencumbered title in my name with no obligation to pay off anyone’s loans, taxes or other past extravagances. Is that too much to ask?

    If the property has yet to be issued with a certificate of final completion then I would be happy to wait until the owner secures that first, and then title ready for transfer but the cash will remain with me until such time as transfer is effected. What could be simpler?

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