BUSINESS

Brussels clears Greece’s home protection scheme

TAGS: Banking, Property

The European Commission has approved Greece’s home protection scheme, which supports householders who cannot meet mortgage payments and are at risk of losing their primary residence.

The Commission said on Thursday the scheme did not violate state aid rules.

The scheme, which has an annual budget of about 132 million euros, sets strict eligibility criteria on the value of primary residences and the income of borrowers to ensure it is targeted at those truly in need.

Eligible borrowers can receive a grant from the government corresponding to 20 to 50 percent of their monthly loan payment depending on their income, as long as they resume paying the residual part of their monthly payment. If borrowers stop servicing their loans, banks can initiate foreclosure on the property.

“The Commission concluded that, with respect to individuals, including those performing an economic activity, the measure does not involve any state aid,” it said.

It said the scheme provided an indirect advantage as it would increase the amount of repayments banks are likely to receive on their nonperforming loans.

The indirect aid, it said, would not create undue distortions of competition as it is limited to what is necessary to meet the overall objective – ensuring that borrowers do not lose the house they live in.

[Reuters]

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