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Pressure on House to act on foreclosures

Pressure on House to act on foreclosuresKEY ASPECTS of the new repossessions legislation are for the time being unenforceable, the attorney-general has said.

In a letter dated November 19 addressed to the finance ministry and later forwarded to parliament, AG Costas Clerides noted that certain provisions of the law – enacted in September – cannot be implemented unless the relevant accompanying regulations are first passed by the House.

Such provisions include the method of selecting auctioneers for properties undergoing foreclosure as well as the process governing the issuing of foreclosure notices.

Speaking in parliament last week, Finance Minister Harris Georgiades likewise told MPs that the foreclosures law could not be imminently enforced.

In doing so, the minister was apparently seeking to dissuade opposition lawmakers from tabling bills aiming to delay the entry into force of the contentious foreclosures legislation.

Two parties have tabled fresh legislative proposals to suspend enforcement of the foreclosures law, pending the enactment of the bankruptcy-related legislation. The insolvency framework, they argue, is necessary as a safety net for homeowners who have fallen on hard times and are unable to keep up with mortgage payments.

AKEL’s bill aims to suspend implementation of the repossessions law until end of June 2015; the other legislative proposal, tabled by EDEK and co-sponsored by DIKO and the Greens, would postpone the law until the beginning of the year – even though the foreclosures law itself does not come into effect until January 1.

The parties appear determined to press ahead with these bills in spite of the finance minister’s warning that any move impacting the repossessions law would jeopardise the disbursement of financial assistance from international lenders that is due by December 15.

Tuesday’s session at the House finance committee is crucial, as the two bills are set to be discussed and the parties expected to give their final positions.

Reports said that AKEL and EDEK intend to push the two items to the plenum for a vote this Thursday.

Earlier this month eurozone finance ministers endorsed in principle the disbursement of the next aid tranche, finding that Nicosia has amended laws on foreclosures and forced sales of mortgaged property in line with a deal with its international creditors.

But the Eurogroup also added that the payout would be recommended “so long as this situation remained unchanged”.

Also on Tuesday, the House finance committee will take a first look at a bill aimed at increasing the government’s direct control over state-owned enterprises, such as semi-governmental organisations. The bill – expected to be hotly debated – would give the government a fast-track method of sacking board members or the entire board of such entities for dereliction of duty or on other grounds.


  1. @carol on 2014/12/01 at 8:00 am – Please see my earlier reply to Andrew and molliemou. We’ll just have to wait and see what’s in the new law when it eventually comes into force.

  2. What I want to know is what is going to happen to the people where the developer has gone into liquidation and it is their only home !!!!

  3. Steve – you clearly have no idea either – CHF was offered – it was not discussed but we were told that this is ‘what banks do in Cyprus’. The agents demand £3000+ non refundable to reserve a property, and if you don’t accept the loan you lose the deposit. (In hindsight, a small price to pay). 1000’s are in this situation, nearly every buyer was treated the same.

    As the banks already knew that euro loans were best for buyers, (or £), their current position is indefensible. Of course, they would have got away with bad practice had CHF not appreciated, and interest rates had been reduced (not increased), in line with most other countries.

    If instead, £cyp/euro loans been offered, consistent with good banking practice, (and this is a crucial point), property valuations would not have been inflated, resulting in lower selling prices. So no crash, and far less NPL’s.

    The best investment however would have been to borrow 100,000 euros, buy CHF with it, and forget any property! Effectively this is what the bank did to us by making us sell euros to them, so they could buy CHF to our detriment.

    It seems we are currently heading to ‘cash only’ property purchases – in line perhaps with the once lower prices in Northern Cyprus, where property value is not dependent on the banks.

    FYI, I would be more than happy to make fair and affordable repayments; I have offered to make repayments at the original agreed level, and share the eventual sale proceeds in say 10yrs time 80%bank/20%me. But no response – they are not in the slightest bit interested, they just want to screw us into the ground and destroy our lives and that of my family too, so they can admire their balance sheets and bonus payments. Look how RBS and Lloyds wrecked UK businesses (BBC Panorama 24.11.14), a drop in the ocean compared to Cypriot banks!

  4. @Janine. In case there has been any misunderstanding, my first paragraph refers to mortgages and mortgage lenders’ practice in the UK. My second paragraph refers to the situation in Cyprus. I certainly sympathise with anyone in your particular set of circumstances.

  5. So the mortgage product sold by the banks was totally inappropriate. Yet so many property purchasers seemed to buy into Swiss Franc mortgages. Why did they do that? It wasn’t because there were no mortgages available in any other currency; there was a positive incentive to do it and that was the low repayments due to the very low interest rates in Swiss francs. Borrowers could afford bigger mortgages for the same repayments as would be paid in sterling or some other currencies carrying higher interest rates. There was a market for Swiss Franc mortgages so the banks supplied them. If the franc had stayed at the same exchange rates versus the pound and euro no one would be complaining. The reality is that the pound has been falling against the Swiss franc for the whole of my life.

    Now my financial text book says “Don’t get involved in what you do not understand. Don’t invest in soya beans or gold futures if you don’t understand them.” I have heard many times that if something looks too good to be true, it probably is and yet the newspapers are full of stories about pensioners losing their life savings in investments that were supposed to generate double digit returns in a short time…. and many of them get their money back!

    I made a mistake. I thought I understood the pitfalls in buying property and that I could spot crooks a mile off…. so I bought property in Cyprus. Now I would like to announce that I was mis-sold this property and the seller or the government or maybe some financial regulator or ombudsman should take the property and give me my money back….Please.

  6. @Andrew on 2014/11/26 at 12:53 pm and @molliemoo on 2014/11/26 at 12:47 pm – As the Foreclosures Law has yet to be published, no-one knows whether the homes of those who were duped into buying property built on mortgaged land will be protected. (There was protection in one of the draft amendments to the law when it was announced originally, but I don’t know whether this has been carried forward into the new draft law).

    And Andrew – the government has no intention of seizing property to satisfy the Troika.

  7. @Janine. I am truly sympathetic to your predicament and I certainly am not ‘siding with the banks’ – the banks in Cyprus have been despicable. However, their crooked behaviour does not remove the basic requirements of loans and mortgages i.e. they have to be repaid. I think a clear distinction is needed between those borrowers who only got in a mess because of the crooked behaviour of banks, developers and lawyers and those other borrowers who may not have been treated wrongly and do have the means to pay but are refusing to pay that and also their taxes. The latter group seems to be largely made up of Cypriots, rather than foreigners who bought holiday homes.

    In the UK, HMRC will not accept a taxpayer’s plea of poverty as an excuse if there is evidence the individual owns several properties or has other assets. HMRC will insist that an asset is liquidated so that the taxpayer can meet his primary obligation of paying his taxes. Banks will also foreclose regardless of poverty pleadings. Until and unless Cyprus adopts a similar policy, the many we see here on a daily basis living a life of luxury but not repaying their loans or paying their taxes will continue thumbing their snouts at honest citizens.

  8. It appears that buyers who were misled into buying homes with undisclosed/hidden NPL are being overlooked.

    Will the government also seize these paid for homes in order to satisfy the Troika?

  9. @Janine on 2014/11/26 at 11:52 am – Back in July, the the Hungarian parliament passed a law forcing banks to compensate borrowers for “unfair” conditions in mainly forex loans – most of them denominated in Swiss Francs.

    It’s been estimated that Hungary’s new law will cost the banks between €2 billion and €3 billion.

    At least there is one country in the EU that is prepared to force its banks to compensate borrowers!

  10. Am I right in assuming that the value of ‘hidden’ mortgages by Developers probably amount to a much larger proportion of individual homeowners who cannot/wont pay their mortgages? If so, are these included in the Foreclosures Law?

  11. Stuart – you do not understand – the mortgage product sold by the bank was totally inappropriate, as many NPL defaulters were speculated against in the FX markets. I heard that in 2005 a Cypriot bank manager strongly advised a friend/client not to use CHF for a mortgage, and to buy CHF with euros. Had we all been advised similarly, we would not be in this mess. But the bankers stood to make inflated commissions, and massive profits by using CHF. Tripling margins too whilst euribor interest went down meant our repayments went from 200 euros a month to 800 euros a month (in CHF), and no one can budget for that. (With capital they now want 1400 euros a month). This on a tiny apartment worth 30000 euros, for which we paid 110000 euros. No title deeds either. It would be totally nonsensical to pay anything!! Apart from losing 25000 euros deposit, the bank wants to take my UK home too. That is definitely something I never agreed to – the contract did not say ‘As well as the property you are buying, if you do not pay at least 3 times what we have originally agreed, you could lose your UK home too, and all your lifesavings’. So please, before you (and others) side with the bank, just think what crooks the banks are, and how they have destroyed so many people’s lives. In the UK, they would have been heavily fined for misselling and ordered to compensate victims, no ifs or buts!

  12. @Peter Davis. Absolutely! Trouble is, according to a former Central Bank Governor now in jail for tax evasion, at least 50% of the population are crooks just like him. They regard it as not only normal but praiseworthy to not pay taxes and not repay loans. That is why it is so essential that all these big shots currently being investigated and prosecuted for fraud, corruption, tax evasion etc (and all the other crooked big shots not yet publicly identified) do get jail time. That is in addition to the ‘won’t pay, won’t sell one of my many properties to pay my taxes and debts’ brigade who deserve to lose their assets.

    Pour encourager les autres, mon ami.

  13. Every mortgage offer in the UK carries the following warning: “Your home may be repossessed if you do not keep up repayments on your mortgage”. There is no case for any misunderstanding of this statement but lenders are obliged to carry out intensive ‘affordability’ tests to ensure customers can repay their loans even if interest rates rise.

    Not so in Cyprus it seems where loans are easily obtained and just as easily defaulted if the customer feels he no longer wishes to service his debt. We all encounter ‘hard times’ in life but still remain responsible for meeting our obligations.

  14. Bank are not a charity. Neither should they be run for the benefit of friends and family.

    If you have a loan you have a contract. Pay back the money or the property gets repossessed. No ifs or buts.

    I feel sorry for those in desperate need, but I resent my taxes, paid under threat of prison if I fail to pay, being used to support them. Taxes seriously reduce my standard of living, and I go without ‘wants and needs’ to pay them.

    I have no objections to a loan being given from my taxes to help these people in need, but it must be short term and with a fixed rate of interest.

    It’s time Cyprus got real like the UK, in the UK you know your house will get repossessed without help from the Government.

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