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28th November 2022
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HomeProperty NewsHouse extends foreclosures freeze again

House extends foreclosures freeze again

When the freeze was last extended in July this year Elizabeth McCaul (a Member of the Supervisory Board of the European Central Bank) advised caution over amendments to the foreclosures law stressing that “such policies can also backfire and destabilise the banking sector if designed in a haphazard manner.”

At that time ratings agency Moody’s warned on that the amendments approved by the Cyprus parliament to the legal framework governing foreclosures were “credit negative”, as it expected that they would “hamper banks’ efforts to reduce problem loans”.

Moody’s said that the amendments “will likely lengthen the foreclosure process”.

“The amendments will likely make it more challenging for banks to foreclose on collateral held against defaulted borrowers. Importantly, the amendments broaden the reasons based on which a borrower may appeal the foreclosure process and challenge a property`s auction, which will likely cause long delays in the process because of inefficiencies in Cyprus’ judicial system, with long delays and a big backlog of cases”.

The freeze protects homeowners with primary residence with values of €350,000 or less, businesses with a turnover under €750,000 and land with a value of €100,000 or less from repossession.

The backers of the bill argued that it will bring relief to debtors during the continuing financial fallout from the CIVID-19 pandemic and Russia’s invasion of Ukraine.

Although the bill will protect financially vulnerable households, it will also protect ‘strategic defaulters’ (i.e. borrowers who are able to make their mortgage repayments but choose to stop.)

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