AN AMBITIOUS plan publicized by the Cyprus Ministry of Finance as the perfect cure for the non-performing loans malaise of the banks is probably falling flat on its face, inside sources quoted by local financial news outlet Stockwatch said last week.
The ministry had said that “Estia” (Home) plan could help up to 10,000 owners of non-performing loans to repay their dues to the banks by subsiding their monthly instalment, and at the same time could unburden the banks of 3.5 billion euros (about 3.86 billion U.S. dollars) worth of bad loans.
Applicants to the scheme would safeguard their mortgaged primary resident against bank foreclosure.
However, with the normal time limit for applications to be submitted ending on Friday, Nov. 15, only about 200 loan owners had applied for relief and the government has extended application time to the end of the year.
Lawmakers who examined the trickle of applications said it was probably due to the complexity of the application process.
Applicants must fill 30 pages with family income and property details and at the same time append 40 to 50 different types of documentation, which requires a great deal of time and effort.
However, ministry sources said the reason for the low number of applications is most probably the fact that applicants are not eligible as their income and property value is over the criteria set for eligibility.
The applicants, the sources said, are wary of disclosing information about other assets or income, which might lead to capital or tax audits.
The program applies only to loans secured by a mortgage which were deemed non-performing as of Sept. 30, 2017. Loans designated as non-performing after that date are not eligible.
Estia applies to the first mortgage on a residence and covers loans or credit facilities regardless of currency.
Loans of eligible applicants will be written down to the market value of the primary residence and then the borrower will have to pay two-thirds of the monthly instalment of the rescheduled loan every month.
The state will subsidize the instalment by one-third, with the state making a direct payment to the banks once a year until the loan is completely paid off.
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