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Tuesday, 17 November 2015

Greece: Latest on First Home Foreclosure and Auction Parameters, and Other Pending Issues

UPDATE, Greek News Agenda - Parliament Passes Reform Bill, Gov’t Looses Two MPs

From Kathimerini (Greek)

Government and lenders nearing a deal

"According to sources, the two sides made significant progress in bridging their differences on the thorny issue of foreclosures and the protection of primary residences. Though there appears to be an agreement to protect a minimum of 25 percent of homeowners from losing their properties if they do not keep up with mortgage repayments, the aim is to introduce additional criteria that would lead to this protection extending to up to around 60 percent of mortgage holders".

It seems that there may be further protection through a cap on the number of properties that banks are allowed to put to auction.

Highly complicated.

CNBC report

ECB Opinion - OPINION OF THE EUROPEAN CENTRAL BANK of 10 April 2015 on the prohibition of the auction of primary residences (CON/2015/14) -pdf

"Impact of the draft law on effective debt resolution processes and financial stability 

3.1 As indicated, the ECB notes that the draft law grants protection from the auction of primary residences to a very wide group of debtors who have a net annual income of up to EUR 50 000 and a total value of movable and immovable assets not exceeding EUR 500 000. Thus, in practical terms, the draft law materially reinstates the broad-based moratorium. The very broad scope of eligible debtors, which goes beyond the protection of vulnerable and low-income debtors, may create moral hazard and could lead to strategic defaults, further undermining the payment culture and future credit growth, as explained above. 

3.2 The repeated extension of broad-based prohibitions on auctions for primary residences does not constitute a sustainable solution for addressing the high level of NPLs in the Greek financial sector. First, it minimises incentives for debtors to cooperate with creditors in restructuring NPLs through efficient processes that take into account the debtor’s capacity to repay. Second, the draft law could undermine the effectiveness of recent reforms that have been implemented in Greece with a view to enhancing corporate and personal debt resolution frameworks. Such recent reforms include notably the establishment of a Government Council for the Management of Private Debt, the adoption of a code of conduct to regulate banks’ engagement with debtors, the establishment of an out-of-court debt restructuring framework to facilitate the early rehabilitation of viable firms that are suffering with debt, and the adoption of definitions of a cooperative borrower and reasonable living expenses for use in debt workouts".

Update, Kathimerini

Σε ότι αφορά το θέμα της ρύθμισης των «κόκκινων δανείων» ο κ. Τσακαλώτος δήλωσε ότι δεν θα υπάρξει τώρα νόμος αλλά ότι συμφωνήθηκε η στρατηγική που θα ακολουθηθεί. Από την πλευρά του ο κ. Σταθάκης παρουσίασε την λύση που βρέθηκε για το θέμα των πλειστηριασμών της πρώτης κατοικίας σημειώνοντας ότι το 25% των ιδιοκτητών που ανήκουν στις πιο ευάλωτες κοινωνικά ομάδες, θα προστατευθεί πλήρως, ενώ από το 25% έως το 60% των ιδιοκτητών θα υπάρχει υψηλή προστασία αλλά όχι πλήρης. Να σημειωθεί ότι από εδώ και πέρα ο προσδιορισμός της δόσης που θα πληρώνουν οι δανειολήπτες θα καθορίζεται από τον προσδιορισμό της τρέχουσας εμπορικής αξίας των ακινήτων κάτι το οποίο σημαίνει ότι οι τράπεζες θα υποστούν ένα «κούρεμα» στις απαιτήσεις τους, λόγω της μείωσης της αξίας των ακινήτων.

Update in English

"The fact that authorities moved from pledging to shield virtually all first homes from repossessions to guaranteeing protection for only a quarter is certain to test the loyalty of coalition lawmakers".


Greek News Agenda

A Greek Bank Tragedy (link from Observing Greece) - Greek Public Policy Forum - Ελληνικό Φόρουμ Δημόσιας Πολιτικής

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