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Thursday 17th June 2021
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Homeowners need protection from troika proposals

THE GOVERNMENT has countered the troika’s pro­posal for the seizure and sale of properties held against bad loans after a period of 18 months, stating that it wants to protect residential property dwellers.

In its economic adjustment programme for Cyprus, un­der the heading ‘Regulation and supervision for banks and cooperative credit insti­tutions,’ the troika advised that “strong efforts should be made to maximise bank recovery rates for non-per­forming loans, while minimis­ing the incentives for strategic defaults by borrowers.”

It proposed that “the ad­ministrative hurdles and leg­islative framework currently constraining the seizure and sale of loan collateral will be amended such that the prop­erty pledged as collateral can be seized and offered for sale within a maximum time-span of 1.5 years.”

In addition, “the procedures guiding the repossession of cash and other financial as­sets, which are not pledged as collateral and are held by de­ faulted borrowers outside the lending institution, should be appropriately accelerated; taking into account also the possibility of moving these assets within and outside the banking sector.”

But the government wants to extend the period to five years. It proposes that owner-occupied housing be exempt­ed from any asset seizures. That would still affect assets such as inherited property, second homes, or land plots.

A major sticking point is the troika’s proposal for a redefi­nition of banks’ non-perform­ing loans (NPLs), which if ac­cepted would cause Cyprus’ bailout figure to soar. They propose that “the Central Bank of Cyprus’ guidance on the classification of loans as non-performing be immedi­ately amended to include all loans past due by more than 90 days.”

The government’s counter­proposal on seizures, part of its ‘file’ on credit institutions, was leaked to the media with­in hours of being handed to political parties. Central Bank sources said the number of properties seized by banks over the last few years is sta­tistically negligible.

That’s because the process ends up at the Land Registry Department, which typically informs a bank that due to its huge backlog it will take the bank a long time to gain pos­session.

Cyprus Property Action Group comment

UNDER the troika’s pro­posal, there would be an increased risk for all those people without title deeds losing their proper­ties where developers who have non-performing loans (NPLs) lose their collateral and it goes to the banks. An estimated 130,000 title deeds are pending.

But according to Dennis O’Hare, head and founder of the Cyprus Property Ac­tion Group (CPAG), there is more to it than meets the eye.

He said: “The troika doesn’t understand the situation. They are going about it in a similar way as they dealt with collat­eral in Spain and Ireland. There, the developers built properties with bank mort­gages which they have been unable to offload. The key difference in Cyprus is that developers have taken out mortgages on properties and sold them to other peo­ple.”

O’Hare said that if a de­veloper here goes bust, it is not just banks which stake a claim on the property: “Other creditors come out of the woodwork, like the Inland Revenue Depart­ment, the VAT Service, and so on.”

“At the end of the day, be­cause of all these claims, the amount of debt on title deeds grows to about three to four times the value of the asset, including the bricks and mortar. With the troika’s proposal, since all the other claims would also have to be satisfied, at the end of the day the banks would get back only a small percentage of their invest­ment.”

CPAG cites the ratings agency Standard and Poor’s noting that the bail­out package from the EU being negotiated would be in excess of €15 billion, with €6.5 billion required for the banking sector, mostly for recapitalization.

“We are afraid that the ratings agencies don’t know the half of it,” CPAG says on its website.

O’Hare has this take: “Were the government to accept the troika’s pro­posal, it would expose the whole rotten system. And I believe that’s why they are trying to leave out owner-occupied lodging from bank seizures.”


  1. @DAVID – In Cyprus, land and a house built on it are inseparable in terms of title. But yours is an interesting hypothesis.

  2. If I am not mistaken it is only the land that the banks can reprocesses not the house. I would BULLDOZE the house. Your comments please.



  3. Steve, in answer to your question:

    You cannot blame the victim of a crime for walking down the “wrong” alley or say for having on too short a skirt. Of course they should take all precautions, but it’s never possible to take “all” precautions.

    You can’t blame the banks (or solicitors, or any other so-called “professionals” either). Being an ex-banker, banks, like children or rugby players, are only as naughty as they’re allowed to be. Remember, at one point in the UK, we tried to charge people for making withdrawals from their own current accounts! Those were the days they were (wipes wistful tear from eye…)

    You can’t even blame the government for not having the appropriate checks and measures in place (even though obviously they should). Governments are not made up of aliens who’ve seized power from the poor, unsuspecting people. Well, certainly not in a democracy.

    You can’t blame the EU. If one understood why the EU is in place (despite what it may actually say) you’ll realise that they have an “unenforceable guidelines backed up by pathetic fines” role. Hence, unenforceable. Those expecting the EU to fly in with its underpants on outside its trousers to save the day are (hopefully) starting to wise up.

    The fundamental blame lies with the PEOPLE themselves: all those who’ve allowed the corruption to take place, profited from it (as “I’m alright jack” etc) and turned a blind eye. Without people like the nice lady who bought Conor O’Dwyer’s house, (even though not a Cypriot), well, he for one would not be where he is now.

    Many people on this forum have trotted out the old Edmund Burke: “All it takes for evil to triumph…” line. They’ve also quoted the famous Alexis de Tocqueville quote, but I prefer the Henry Mencken variation (as again previously stated on this forum): “People deserve the government they get, and they deserve to get it good and hard.”

  4. There are still no replies to my comment below. This is how crazy the whole scenario has become. If the bank take over this site there are still registered specific performances lodged on all properties. The solicitors will have a birthday. Talk about good money after bad.

  5. It really is incredible. People talk about other countries in the same boat. Do any other EU countries operate this system in relation to property? If they do what is happening there and how do they tackle the problem. Let’s not forget, this all about money. Everyone will try to save their own skin. Maybe the only way out of this mess is for the authorities to rule out criminal investigations and convictions for fraud and keep it all within civil litigation. That way we may be able to resolve the situation to some extent, but someone has to take the hit. Who will it be, for how much and when.

    If the properties are taken over by the banks as they are sat on land with unserviced developers’ loans then purchasers will stop paying their loans which will be a disaster for the banks. We all know why the banks have not sold the land, its because it is virtually useless in comparison to the developer loans. They would never recoup their losses. Better to have a steady stream of motgage payments each month.

    If the EU or British Government were so bothered about protecting consumer rights they would suspend Cyprus’ right to obtain European enforcement orders for non-payment of loans due to alleged fraudulent practices.

    With all the combined brain power looking at this you’d think it would be easy to fix. It’s not rocket science! But its all about the money!

  6. I think the government is only worried about their complicity in the fraud/scam being exposed.

    Home owners needed protection from the Cyprus property and banking sectors but successive Governments chose to do nothing to solve the problem but rather through the introduction of, quite frankly, useless laws made matters even more complicated and expensive for the home buyer and solved nothing.

  7. If a developer has a site of 8 properties and obtains deposits of 30 percent on each property. The remaining 70 percent of the funding comes from the banks by way of purchaser mortgages. The site is only 65 percent finished but all the bank funds are released and then the builder disappears with the money.

    Who in this situation needs to hold their hand up. Just to make things worse all the mortgages were taken out in the dreaded Swiss Francs. Is it:

    The purchaser for being so stupid

    The banks for lending and releasing the money

    The solicitors for allowing this to happen.

    The only people that are going to lose money are between the bank and the purchaser. Guess who will come off better?

  8. I agree with some of the comments here. Troika have a job to do and don’t care how they complete their task or who they hurt in the process.

    The Cyprus Government are extremely worried about the whole situation of developer mortgages and title deeds being withheld for the purpose of securing more funds whenever they needed in collusion with the banks and legal profession at our cost as we were all to find out later……

    This will become completely public and they will have to explain how and why the properties that are paid for (by the owner occupiers) are being repossessed by the banks etc. This will show the world what many have been saying for years is going on in Cyprus and show them up for the deceitful money grabbing leaders and business owners they really are !!!

    What a shame it has come to this, the lovely island of Cyprus now has a tarnished reputation like no other…..

  9. Andyp you are correct, the word not used enough is fraud.

    Fraud is deceit for profit, and that is exactly what many of the Developers have done, including their lawyers.

    Another word is lies, lies told to you when you purchase your property.Even worse lies by the “legal” profession.

    I am also in the mind that the Land Registry is not “clean”, when it comes to Sale Agreements being moved about, when lodged in the “care”.

  10. The Troika’s primary (only?) aim is to make Cyprus solvent. The rights and wrongs of the Title Deeds Scandal, and the impact on the finances, lives and health of all those thousands who have not got their TDs, are therefore not part of their calculations. That fact may be a reason why they have not distinguished between developer mortgages and buyer mortgages and the adverse effect that NPL enforcement may have on some luckless, innocent buyers.

  11. I do not believe for one second that the Cyprus Government has any concerns regarding anyone who will be caught up in all this.

    I believe and hope that the proposals by The Troika are to ensure Cyprus falls into line with the majority, if not all, other Banking systems regarding the declaration of non performing loans. In addition I think it is the only way to get to the bottom of the problem and actually quantify the Developers debt as neither the Banks nor Government seem prepared to disclose the true figure involved.

  12. I wonder what the real figure is for Developer Loans is.

    And where the money is now, have they spent it on new-builds or have individuals salted it away ?

  13. AT LAST true colours are starting to be shown (not of the Cyprus banks, nor of the government as we know these guys already), but of the TROIKA!

    I’m enormously pleased that CPAG has recognised that LTVs are in the region of 300 – 400% (as a few of us knew all along). I’m also pleased that S & P have put the bailout package requirement as in excess of €15bn (as again, those in the know i.e. ME!), had already estimated as €20bn.

    What I completely disagree with CPAG about though is their statement: “The troika doesn’t understand the situation.”

    Denis, they DO know. They really, really do. YOU, plus loads of others have been informing the EU for years. Campaigners from all walks including pressure groups, residents’ assocs, MPs, MEPs, all sorts of Ps have been banging on about the title deeds situation and have explained it all until blue in the face. Finally the Troika document tells us what again, some Clever Clogs have been saying for years now: the EU/ECB/IMF are sufficiently well-informed to know and understand the impact it has on us.

    But they just don’t care.

  14. Will we ever know how many proposed repossessions are due to Developers unpaid and unserviced loans rather than the affected “home owners” defaulting on their obligations?

    The two situations should be treated differently.

    Default by Developers leading to repossession is in my opinion due to the Banks own negligence, greed and complicity in the what I would call fraud against the home owner.

    All parties involved in this fraud including the advising lawyer should be held to account and made ultimately responsible for this debt.

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