Banks warn suspending foreclosures could do more harm than good

Banks have warned that suspending foreclosures would do more harm than good as opposition parties were poised to do just that, tabling five bills citing the fallout from the pandemic.

Lenders said the auctions scheduled for this year concern debts, which were non-performing long before the pandemic and before the end of 2019.

Almost all have been decided in court and have been terminated in 1991, 1992, and 1998, banks said.

The auctions in question concern fields, building plots, commercial real estate, holiday homes, villas and uninhabited dwellings slated for demolition.

The issue is being monitored closely by European supervisory authorities and ratings agencies, which may downgrade the island’s rating.

It could also mean reduction of the collaterals held by banks because of the delays and the extension of the time needed to liquidate them.

In turn, this would force banks to require increased collateral and a rise in the cost of borrowing.

Cyprus currently has the highest percentage of suspended loans – over 50 per cent – in the eurozone.

Loan repayment was suspended in March to help people deal with the fallout from the coronavirus crisis. The suspension will be in effect until the end of the year.

The bills were submitted by socialist Edek, the Green party, Akel and far-right Elam.

Edek is asking for all such sales to be postponed until the end of the year due to the looming recession expected because of the ongoing pandemic.

The Greens submitted two bills, one on the freezing of foreclosures due to non-payment of mortgages and the second suspending any processes already in the works to cover the period March to June 2020.

Akel’s bill involves postponement until emergency measures and policies are decided and put in place.

Elam calls for suspension until the end of the year.