- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Hidden mortgage breakthrough

Hidden mortgage breakthroughBEFORE parliament breaks for the summer break, the government intends to bring new legislation addressing the problem of thousands of home buyers trapped without Title Deeds, Interior Minister Socratis Hasikos said on Thursday, calling on banks to assume their responsibility.

“Very soon, we will submit the bill, which will really cover these cases, to parliament,” he told reporters.

“The bill will be much improved…and truly safeguard those who paid for their homes in full or who have been consistent in regard to their obligations to the seller, but still cannot get the title to the property.”

The legislation would go beyond just ensuring that those without Title Deeds – because of developers’ outstanding debts to banks – are protected from repossession.

“We will take it a step further, so that these people can take possession of the title and be able to put it up for mortgage,” Hasikos said.

“What is now taken for granted is that the banks must finally take responsibility for their actions. When they were giving out loans to developers or contractors to build an apartment block, they ought to have checked that this money was being used for that specific project and not for something else.”

“The buyers,” he added, “are not at all responsible and they must be protected.”

Although Hasikos declined to go into details, responding to a question he said that under the new legislation the buyers would not “necessarily” have to pay extra to receive Title Deeds.

Developers’ land and buildings are counted as assets that need to be offset against their debt to banks, which gives lenders a claim on people’s properties that had been mortgaged by developers.

Tens of thousands have been left without deeds as a result.

Under the terms of its bailout, Cyprus has set up a task force “on registered, but untitled, land sales contracts” that must prepare a study by the end of May. This should have been done by October last year.

Speaking to the Mail on condition of anonymity, a government source on Thursday hinted that authorities may have already completed their cost assessment of this category of mortgages.

Asked what kind of hit lenders might take from the coming bill, the source said only: “The Central Bank doesn’t have a problem with it.”

To Cyprus’ international creditors, banks’ non-performing loans, as well as their ability to recoup these, posed the single largest financial challenge facing the economy.

Loans in the red currently account for around half of all bank credit.

In March, parliament passed a bill indefinitely banning repossession of houses whose owners have no Title Deeds, even though they may have paid for them in full, as the building developers had already taken out loans on those properties which they cannot repay.

MPs basically changed a clause in the main foreclosures law that exempted this category of properties from repossession until April 30.

According to the provision, such properties will be exempted provided the buyers paid at least 80 per cent of the sale price or have fully complied with their contractual obligations towards the seller.

But the President refused to sign the bill into law and sent it back to parliament, arguing that it was unconstitutional and created ‘a general and permanent shield’, not for vulnerable groups, but a number of sellers and land developers.

Parliament accepted the president’s argument and changed ‘indefinite’ to ‘July 10.’