The framework for The Foreclosures Bill was approved by the Cypriot Parliament late last year, but the legislation was suspended on two occasions after being blocked by the opposition.
One of the six laws – which all come under the umbrella Foreclosures Act – refers to the mediation between the Cypriot banks and mortgage debtors in the country. It will set out guidelines to ensure those low-income homeowners who want to keep their properties do not have their houses repossessed by the banks.
The controversy revolves around investors who purchased properties in Cyprus during the island’s property boom in 2003.
Cypriot banks sold mortgages to many of the buyers – some of who are British – in Swiss francs, a currency which subsequently soared, therefore reducing the value of their investment significantly and increasing the value of the loans, leaving many unable to pay up.
Since 2011 the banks in Cyprus have been under growing pressure to reach agreements with clients who owe money. The laws are expected to help facilitate this, creating a more efficient process, while also providing some protection for those with mortgages or loans.
“Good news”
“This is good news for those who wish to keep their property but face genuine hardship or difficulty and are looking for a workable agreement on their mortgage,” said Neil Heaney, chief executive of Judicare, the law legal firm which defends many of the buyers in this case.
He highlighted, however, that the mediation law is not designed for those who believe they were mis-sold a mortgage or for those wanting to get rid of their Cypriot properties.
Christos Triantafyllides, who helped prepare the laws and is the lead Counsel for Judicare, said the new legislation will “regrettably, signify the beginning of an ever more aggressive attitude on behalf of the banks, particularly against those who have borrowed from them and who are not consistent with the payment terms agreed”.
The Act was delayed because the insolvency regulation, which linked to The Foreclosures Bill, was yet to come into effect.
