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MPs focus on foreclosure regulations

foreclosure regulations MPS ON Monday continued discussion of the regulations governing the auctioning of properties in foreclosure, with the aim of voting them into law at Thursday’s House plenum.

Passage of the ordinances will enable new repossession laws, cleared in April after months of political wrangling, to come into force.

In turn, the implementation of effective foreclosures legislation is a condition set by international creditors for completing their latest review of Cyprus’ bailout programme. This would pave the way for the resumption of bailout payments, as well as signal the island’s eligibility for the European Central Bank’s borrowing programme known as Quantitative Easing.

As they stand, the government ordinances on foreclosures – which require the nod from parliament – provide that auctions will take place from Monday through Friday, 9am to 5pm, except for public holidays.

As reported by CyBC, auctions will be held at designated premises, one in each district, to be selected by the interior ministry or the banks. The process will be streamed live online, with auctioneers picked at random by computer.

The principal debtor or guarantor will be given the opportunity to pay the outstanding amount before the auctioneer starts taking bids.

Additionally, auctioneers are not permitted to sell more immovable properties than what are needed to cover a debt. Where multiple properties of a debtor are being auctioned off, the last property to be sold will be the primary residence.

Successful bidders are required to cover all auction costs as well as fees for registering a property in their name. The winning bidder must immediately pay 20 per cent of the sale amount, with the remainder paid over the next 20 days.

Under the same regulations, auctioneers’ fees will not exceed 0.1 per cent on the sale price, for properties under €100,000. For properties worth up to €500,000, the fee is set at no more than 0.25 per cent, excluding the first €100,000. In any case, the fee must not exceed €300.

During the same joint session on Monday, the House finance and interior committees also debated a bill, drafted by the Central Bank (CBC) and concerning the sale and transfer of bank loans to third parties.

Opposition MPs have raised a red flag that debts might be sold off to financial companies controlled by Turkish interests.

CBC officials reassured deputies the bill features a number of safeguards against this.

Back in January, parliament passed an amendment to the Banking Law (1997 to 2013), inserting a clause by which banks licensed in Cyprus may not sell a loan portfolio to credit institutions – such as hedge funds – operating here but licensed elsewhere.

As the law stands, banks may dispose of loans (in whole or in part) only with credit institutions that have been licensed in the Republic.

The ban applies until June 26, by which time the government hopes to finalise and table the CBC bill, which needs to be green-lighted by the troika of lenders.

Yiangos Demetriou, head of the CBC’s bank supervision and regulation, told MPs that financial companies licensed in Cyprus would also be required to be based here in order to buy up loans from banks.

Additionally, the companies would come under full CBC supervision, and their owners subject to ‘suitability control’.

According to Demetriou, the CBC was now waiting for the troika’s feedback on these clauses.