CYPRIOT authorities are expecting the European Commission’s “go ahead” scheme aiming at protecting insolvent households repay their mortgages for their primary home with an annual budget of €2m, after the Commission requested and received additional information, an official said.
“The questions raised by the European Commission were of procedural nature requesting clarifications which were answered on Wednesday and we expect that we will soon have the green light to implement this scheme,” Charalambos Petrides, chairman of the Cyprus Land Development Corporation said in a telephone interview on Friday. “The scheme aims at helping low earners who are really in need of it based on concrete criteria as they are risking losing their home”.
The scheme, which applies in cases of primary homes with a market value of up to €250,000 and maximum outstanding mortgage of up to €300,000 depending on the composition of affected families, provides for the application of “the same income standards which the CLDC applies,” Petrides added.
Beneficiaries of the scheme may have up to 60 per cent of their monthly mortgage instalment subsidised for up to three consecutive years, Petrides said, adding that the subsidy covers both interest and capital payments. Applicants are required to first exhaust the restructuring procedures before resorting to the Insolvency Service, the division of the Department of Company Registrar and Official Receiver. An appointed insolvency advisory may advise to apply for the scheme.
The support provided by the scheme, already approved by the cabinet last year, “is the last remaining rescue net offered by the Corporation” after applicants request via court order for “personal insolvency arrangements,” Petrides added.
He added that the scheme, which has a cap of €10,000 per year would be able to help more than 200 households which regularly serviced their loans before being affected by unemployment or a drop in income and will not apply to strategic defaulters.
The Cyprus Business Mail understands that authorities requested the opinion of the European Commission after the state-aid commissioner Theophanis Theophanous expressed reservations concerning the scheme’s compatibility with state aid legislation.