Measures for borrowers

Gov’t announces rules for protection of loan recipients, warns banks

The prime minister presented in Parliament yesterday a series of measures for the protection of people who take out loans that is soon to become law, while also sending a warning to banks.

Speaking during the prime minister’s question time, Costas Karamanlis announced that the government is studying various regulations to protect consumers when they borrow from banks. This development comes in view of the excessive number of repossessions and house auctions seen in the last few years owing to indebtedness from loans.

The measures considered include the banning of auctions of properties at prices below their officially determined value (objective value), the compulsory holding of auctions only in magistrate courts with sealed bids, a grace period up to one year for borrowers before a property is seized, a set of social and economic criteria used for the handling of each borrower, a ban on seizing monthly salaries up to 1,500 euros, and the possible increase of the 10,000-euro threshold in debts, below which a borrower’s sole house cannot be auctioned.

Therefore, the government is adopting most of the opposition’s proposals, which PASOK leader George Papandreou greeted with satisfaction.

“There are thousands of families who lose their houses,” he said, asking for more measures.

Karamanlis also warned banks that their behavior toward their clients is being carefully watched: “We recognize their contribution to the country’s development, but they need to show increased social responsibility. We will not tolerate practices which contravene good faith or transaction terms which are abusive.”

He then referred to debt-collecting firms, saying that this is an issue brought to light by the Consumer Ombudsman and that the competent ministries “are working together to produce an institutional framework that will set some rules in this particular industry.”