The Chairman of the Parliamentary Legal Affairs Committee, Nicos Tornaritis, has hit out at vulture funds for refusing to suspend property repossessions ahead of new legislation aimed at protecting “trapped buyers.”
In a strongly worded letter to the head of the Association of Credit Acquiring and Credit Servicing Companies (ACACS), Mr Tornaritis urged firms to freeze auctions, sales and repossessions until the law is finalised. The intervention follows a recent Court of Appeal ruling, which ruled that existing legal protections were unconstitutional.
In his letter Mr Tornaritis also points out that pressure is on the Committee to find a solution within tight deadlines, “following actions by credit institutions, despite earlier commitments made during the passing of the original legislation.” He further reminds that “the issue under consideration is complex and requires careful and thorough study.”
He goes on to say that “the Parliamentary Committee on Legal Affairs, Justice and Public Order is already at the final stage of drafting legislation to resolve the problem faced by trapped buyers, with the proposal expected to be submitted and debated shortly.”
Mr Tornaritis urged ACACS members to halt all repossessions, auctions, and property sales until at least the end of July, when debates are expected to conclude, and expressed hope that the Association would comply.
Background
Non-performing loans and Vulture Funds
To address their high levels of non-performing loans (NPLs), Cyprus banks sold much of this distressed debt to Vulture Funds.
- Vulture Funds specialize in purchasing non-performing loans at a steep discount – believed to be between 15% and 20% of their original value.
- This helped Cyprus banks reduce NPL ratios from 49% in May 2016 to a record low of 6.8% in August 2024. While this was a success for the banks, the consequences for buyers have been severe. These distressed debts included the underlying non-performing loans on properties purchased by trapped buyers.
Vulture Funds use aggressive tactics to recover more than they paid for these loans, including legal action, demanding repayments, and seizing assets like real estate.
Debt-free trapped buyers targeted by Vulture Funds
Even buyers who are debt free are being pursued by Vulture Funds. These funds are demanding additional payments, despite buyers having paid in full for their properties.
- In one case, a Vulture Fund demanded over €20,000 from a trapped buyer.
- In another, a trapped buyer was asked to pay €5,000.
These Vulture Funds also demand proof that payments were made directly into the developer’s bank account, even though developers ceased trading over 15 years ago and the records demanded are no longer available.
