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Friday, June 5, 2020
Home Articles Mortgages muggings and the gutter press

Mortgages muggings and the gutter press

WHEN it came to choosing between Scylla (a disastrous exit from the Eurozone) and Charybdis (the German crewcut), Cyprus chose to stay in the Eurozone. Whether this painful and courageous decision to save the island’s banks and its economy from total collapse was correct we shall never know.

At the present time discussions are continuing on the way forward and the banks should reopen for business tomorrow (Thursday).

Unlike countries outside the Eurozone, Cyprus was unable to devalue its currency or embark on a process ‘quantitative easing’; effectively printing more banknotes to stimulate the economy.

Since the bailout was announced, I have received literally hundreds of questions from those planning to holiday here asking if it’s safe, are there riots, will I be robbed? While those with those with property on the island have been sending me questions about their mortgage repayments and other matters.

Is it safe to visit Cyprus?

In a word YES – do not believe the stories you read in the gutter press, like the one that was recently published by “The Sun”:

“FAMILIES heading to Cyprus for Easter are being told to take plenty of euros – and try not to get MUGGED.”

The extraordinary Foreign Office advice came as the island teetered on the brink of financial meltdown.”

This is a lie; the advice from the Foreign Office says nothing about being mugged. The Foreign Office advises that visitors to the island should take “appropriate security precautions against theft.” This is the same advice it offers to British nationals travelling to many parts of the world – it doesn’t mean you should wear a crash helmet and a suit of armour when you visit the island to avoid being mugged!

My wife and I have lived in Cyprus for eleven years without any problems – and I first want to assure all those planning to visit that the island is perfectly safe – don’t cancel your holiday.

Contrary to other reports in the foreign press my wife and I, who bank with the Laiki, have been withdrawing cash from their machines and paying in shops, supermarkets and petrol stations with our Laiki debit cards.

Property and mortgages

I have received questions from many people asking if they should continue making their regular mortgage repayments to their banks in Cyprus, even though some of them are in difficulty and may not be around for much longer.

In a word, the answer is YES. Failing to maintain your mortgage repayments could result in penalties imposed by the bank for non-payment and the potential loss of the property.

Finance minister Michalis Sarris announced on state TV that alternative arrangements will be made for those with mortgages with the Liaki (Cyprus Popular) Bank.

Non-performing loans

As you may have read, the Laiki bank is to become the island’s ‘Bad Bank’ and will take over all non-performing loans. As regular readers will know, Cyprus had a unique way of classifying loans as non-performing as it did not count fully secured loans as non-performing even though they have not been serviced in 90 days.

I know that that many thousands of people, both Cypriot and foreign, were deceived into buying property built on land that a developer had mortgaged; a material fact that was concealed from them by disreputable developers, lawyers and banks.

The questions I am being asked is what will happen if the developer’s mortgage is classified as non-performing and is transferred to the Laiki ‘Bad Bank’.

I’m afraid it’s too early to say. Until the Memorandum of Understanding has been ratified by the Eurogroup and is in the public domain, no-one can say.

However, I would hope at the very least that those who have bought property with a mortgage and who are maintaining their mortgage repayments will be protected.

Commercial property

As well as property prices taking a dramatic tumble, commercial rents are also facing a downturn.

Many local businesses will face closure as the recession deepens resulting in many commercial properties coming onto the market. This will put further downward pressure on rents as well as prices – and if offshore companies decide to move elsewhere, further downward pressure will be put on prices of residential and commercial property as well as rents.

17 COMMENTS

  1. Nigel. Article 23, which I have just found a draft of, does include immovable property but you need to be “Silk” to understand it.

    I know the Church case does not hence my question.

  2. @andyp – it isn’t related to ‘immovable property’ – it’s to do with the the wiping out of shares in the BoC. It’s been reported that the Church holds a 5% stake in the BoC.

    The Archbishop has taken out an injunction in efforts to prevent this happening.

    Greek media reports that he’s also calling for the resignation of the Finance Minister and the Governor of the Central Bank.

    The Church has a controlling interest in the Hellenic Bank; the island’s third largest bank, which has not been affected by recent events.

  3. I do not know if this is at all relevant to our title deed problems but I see the Church is challenging in court the loss of their BoC shares citing Article 23 of the constitution which “defines an individuals right to property”.

    Any thoughts Nigel?

  4. Spot on Richard. We must all remember to keep up the pressure. Join groups, lobby your MP’s and MEP’s. Do whatever you can to highlight the problems.

  5. Spirit of OJB. – A classic that gave me my first tears of Spring! (Tears of laughter that is!)

    Hold on, there’s someone banging on my front door with something that resembles a large sausage…….

  6. Hmm – the creation of ‘bad bank’ looks like a way of ringfencing in anything they don’t like the look and then selling it off later in a fire-sale to anyone prepared to pay x cents in the Y euro for it. That would be fine if 90+% of that toxic soup hadn’t been mis-sold, mis-managed and mis-appropriated.

    I’m staying right on the track of “scam” thanks. I’ve kept every piece of correspondence and every other bit of useful collateral. Whilst a few ‘bigwigs’ may be congratulating themselves that they’ve ‘saved Cyprus by staying in the E.U’ Cyprus still has a mountain of misdemeanours against individuals that have been duped and conned over there that need investigation and settlement – remember that.

    Don’t think we’ll go away – because we won’t. We know where all the bodies are buried – and will keep pointing them out – tirelessly and relentlessly. Remember that corrupt ones – when you are reaching for the champagne bottle this Easter!

  7. Nigel: those Sun comments are so typical of UK ‘gutter press’, but Millions read them and many, most, think they are true.

    But the FO are right to warn folks, high likelihood of crime rates rapidly escalating, we should ALL increase our personal/business security, having money nicked by thieves is nearly as bad as having it ‘levied’ by Politicians and Banks, (except the former may sadly leave physical evidence of the incidents of course – Beware!).

    PS: I Love the sketch by Spirit of Odd Job, well done for giving ‘him’ the platform and Space!

  8. @ Nigel – I got my title deeds last year. I only got them because I went to the Land Registry Dept in person to ask where they were. I found they had sent a query to the Planning Dept which had then not replied but filed the them as complete and there they had sat for over 20 months, in a filing cabinet.

    I went to the Planning Dept to find there was a problem with the Green Area and it needed a personal visit from the Boss. OK it took over 8 weeks for him to visit and then another 8 week to say yes, it’s OK.

    The file was then returned to the Land Registry and within 3 months the deeds were ready.

    The point I’m making is, I went in with my Land Registry number (got from the developer). The people in the Land Registry and the Planning Office were really helpful at all times, even showing me the register which shows what the ‘snag is’ and where the file is and when it was sent, and what if any waqs the hold up.

    There was no animosity from the staff and I can’t praise them enough. Many put the job they were doing on hold and spent time and effort tracing my enquiry.

    In short go and ask. Don’t send someone else. One problem I foresaw was I kept my neighbours informed of what I had done, concerned that the office would get fed up with umpteen people asking the same question from the same estate. That never happened.

    So if you haven’t got your deeds go and ask, they really are friendly and helpful (until the point where they want three times the amount you should pay) but that’s another story in another department.

    The system was getting computerised so they will be able to tell you. One developer was sitting on title deeds, another had sent them to his daughter in the UK, but not told the buyers, this could be you? So go and ask.

  9. @TheVoice – this is scaremongering. Turkish Cypriot property in the south is managed by Custodian of Turkish-Cypriot properties.

    It cannot be sold. Some has been acquired by the government for various projects (such as the Larnaca airport).

  10. Views from a bunker somewhere in Brussels, Dateline: Last weekend, Present: Nicos Anastasiades (Cyprus), Angela Merkel (Oberfuhrer), Wolfgang Schäuble (Reichsmarshall), Christine Lagarde (IMF), Dodgy Dutch Bloke Jeroen Dijsselbloem (EU Finance Chairman bloke), Spirit of Odd Job Bob (astral protection form only), Ambiance: Tense.

    CL: We have all come together in order to try to resolve the issue of Cyprus. As the MD of the IMF, I propose we follow standard procedure of selling off all state assets, firing ALL state workers, introducing a new 102% tax rate, reduce state spending by 97% and mortgage the first born in every household. Mr President (addresses NA), are you in agreement?

    NA (gets up to speak): May I start by saying that your proposal of raising €5.8bn by raiding bank accounts is totally unacceptable. We want you to give us €10bn RIGHT NOW, and we will give you absolutely nothing in return, because if you don’t, we will leave the euro, sell our gas and oil to Russia, remove your towels from the best deckchairs and wee on your souvlaki when you come on holiday…

    At which point AM rises from table (shouting): Das ist nicht acceptable! You think you can run your economy into the ground and then ask the German voter to pay you indefinite amounts forever?! Schweinhund! She produces large bratwurst and beats NA repeatedly about face and neck. WS whispers to AM who sits down again. WS and AM exchange whispers in German and snigger. NA, stunned, sits down.

    JD (stops staring at the ceiling, focuses on those around as if seeing them for first time): What just happened?

    CL: Mr President, if you would like to make another proposal, I am sure our German colleagues will be receptive. My personal view is that we can depopulate rural areas in Cyprus forcing everyone into population centres where they will be more easily controlled, plus reducing maintenance costs. If we restrict the mortgage on the first-born child to only 25 years, with an option to renew and raid state pension funds…

    NA (reconsidering): Yes, yes! If we raid pension funds, we can create a Solidarity Fund, where we can put in lots of unconvertible assets, say Church property as well as random deposits from honest citizens who love Cyprus so much they are willing to give up their hard-earned money on my say so for no tangible personal benefit. From this, we could possibly raise, er, €1bn!

    AM (screaming): Nein!!! She produces bratwurst again. NA cowers, raises arms to protect face and neck. WS whispers again to AM. She calms down.

    NA (misunderstanding, but still protecting face with hands just in case): We could never raise €9bn.

    CL: No, “Nein” means “no” in German, not “9”. NA sighs in relief.

    JD: Oh, yeah. “Nein” and not “9”. Hah, hah. Cool, yeah?

    AM: We need proper money. We will take from all the rich Russians who have been using your country to launder their filthy money. (Seeing NA’s face contort into a mask of fear, AM adds) We do not need to worry about the Russians, we have dealt with them before and see how that worked out!

    WS taps AM on the shoulder and makes cutting across the throat action with right arm. AM changes the subject swiftly.

    AM: You are not understanding the seriousness of your situation. If you leave the Euro, do you think a gnat of a country with GDP of only €17bn matters to us? We could pay off your country’s debts without batting an eye, but we do not want to. You sell good Germans (plus some English and Russians, but they are inefficient consumers so deserve what they get) property then keep hold of it and borrow against it so your banking sector is overblown. You stuff your bank accounts with stolen Russian money then want us to fix your broken business model. You WILL sell your bad banks, you WILL raid your bank accounts, we have ways of making you more efficient and productive and you VILL OBEY! DO NOT TRY OUR PATIENCE Mr President, for Cyprus, the business model is over (to fanfare accompaniment of Deutschland Uber Alles)! WS smiles and pats AM on back as she regains her seat. One corner of lip curls in triumphant smile. WS whispers to AM in German. Both snigger.

    NA (thoroughly depressed now): If you give us the €10bn, how much do we have to raise ourselves?

    AM: Nine.

    NA: Ah, the old “Nein” misunderstanding again?

    CL: Er, I don’t think so this time…

    NA: But what do I tell my countrymen. I got here having said “Ohi” to raiding bank accounts and having to raise €5.8bn, I come away with having to raid bank accounts and having to raise €9bn.

    WS whispers to AM. AM nods.

    AM: Just do as the Americans do and say it is not a defeat but an “opportunity”. Plus say “My friends” at least 3 times, it always works.

    NA leaves dejected. Mobile phone rings as he steps out the door, searches in pocket to retrieve. As his back turns, WD and AM high 5, smug expressions ear to ear.

    JD: Guys, what just happened. Are we done? What should I tell the press?

    WS whispers to AM. She nods.

    AM: Tell them that a crisis has been avoided in the eurozone. Tell them that stability and depositor confidence have been restored Europe-wide (she looks at WS, both burst out laughing). Tell them that we have established a “template” for future EU bailouts and that (both pat their breast pockets where their newly-minted Euromarks reside) the euro is safe in our hands. (Smug smiles ensue).

    JD: Template? Yeah, I like that. Cool guys, laters.

    NA (re-entering room, looking very worried): Er, Madame Chancellor, a phone call for you.

    AM (annoyed): Who is it?

    NA: President Putin. He sounds pissed off… (smug smiles disappear very rapidly)

    At which point, the projection of my astral presence could no longer be sustained.

  11. There was a comment in The Metro this week that claimed one of the reasons there is a long delay in getting title deeds (if you ever actually get them) is that some of the land is still owned by Cypriots who fled to the north in the 74 conflict. Does anyone know if there is any truth in this, or if its just scaremongering?

  12. It looks very much like the people who have paid for their homes in full with money deposited into their lawyers client accounts and who probably bestowed power of attourney to their lawyer will be the first to lose their homes when the repo firms start up. Why ? because these homes are not tied to the banks through mortgage of the home buyer. A home that is paid for in full will have some sort of open market value. These homes, unless the owners have title deeds, have been used as security for developer mortgage. The Banks knew exactly what was happening, so did the real estate agents and the lawyers and land registry. 130,000 people have been scammed and Euro Parliament don`t appear to give a damn. Long live democracy! One for all and every man for himself.

    What makes the matter even worse is when you look at the glossy brochures in the real estate agents office. They nearly all sing from the same sheet that they sang from before the bubble burst. People are still told that they will be protected by specific performance law but not told that the same law is worthless if an undisclosed mortgage is not repaid.

  13. Nigel, some purchasers of off-plan properties would have used a Cypriot Bank to provide funds to cover the stage payments of the property build, up to the total sales price of the property, less any deposit paid by the purchaser.

    These are usually classed as ‘loans’ not mortgages.

    Do you see any issues here or do you think that those buyers with ‘loans’ be treated the same way as those with mortgages?

  14. The BBC News stated that several hotel rooms in Limassol had been broken into and the safes opened or taken as British holiday makers were leaving large amounts of cash in their rooms.

    Maybe this was where the advice to take “appropriate security precautions against theft” came from?

  15. @Pippa – as I said in the article, it’s too early to say.

    (I assume that your developer has a mortgage on the land that pre-dates the deposit of your contract of sale at the Land Registry?)

  16. I note you say “I would hope at the very least that those who have bought property with a mortgage and who are maintaining their mortgage repayments will be protected.” What about those people who have paid in full for their houses, and had been promised that title deeds were a formality to follow?

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