FinMin welcomes newly-passed foreclosures framework

Cyprus’ Finance Ministry has welcomed parliament’s approval of the newly-passed foreclosures and NPL laws “with full satisfaction”, saying it was part of “the comprehensive package” of measures presented by the Minister of Finance to deal with NPLs and revise the foreclosures framework.

The Ministry said the debate around amendments to the foreclosures framework “has been exhausted” since a balanced safety net has now been ensured for those who need it, without compromising the effectiveness and stability of the foreclosures framework in conditions of financial stability.

It noted the constructive attitude by all those involved, adding that the focus was now on the effective implementation of the new regulations; which he said like all government schemes, focus on protecting primary residences worth up to €350,000, “which covers the vast majority of mortgages”.

“With the new regulations, a greater number of borrowers are given the opportunity to turn to the Financial Ombudsman’s office in order to restructure their loan”, it said. It added that the advantage of confirming a debt through the Financial Ombudsman’s office was the speed with which disputes will be resolved, within strictly defined timeframes, as well as aligning the incentives of borrowers and debtors for an out of court settlement, rather than through legal remedy, limiting any abuse of the judicial system by those involved.

Any cases that result in a judicial resolution of the dispute, and concern “the sensitive perimeter” of the primary residence up to €350,000, are heard as a matter of priority, with instructions from the Supreme Court, it said.

In addition, the implementation of the Mortgage to Rent scheme resolves the NPLs issue and ensures that truly vulnerable borrowers remain in their primary residence, the Ministry said.

In addition to the above, it is noted, the amendments to the Law on the Transfer and Mortgage of Real Estate, which were passed by the House of Representatives in July 2023, “create conditions of transparency for all borrowers”, even for those for whom the foreclosure procedure has begun, through the provision of information on the debt demanded by the creditor, and ensure the fair treatment of borrowers in cases of property exchange for debt.