The Hercules plan that the Finance Ministry tabled in Parliament late on Tuesday regarding the subsidized protection of borrowers’ primary residences includes terms and conditions aimed to avert the seizing of state collateral that many loans have been secured against.
The bill describes in detail the process of loan securitizations that are expected to add up to over 30 billion euros. It will be activated immediately with a retroactive application from October 10 – i.e. the date it received the approval of the European Commission.
The draft law provides for the mechanism of state collateral – expected to reach 12 billion euros or more if required – will apply for 18 months, although there is the possibility of an extension, as has been the case with the similar Italian model that was extended twice.
For the state to reduce the chances of guarantee demands, the bill includes strict rules on collection that the loan manager will have to adhere to concerning the loans to be securitized.
The servicer will be the one to undertake the claiming and collection of requirements from debtors and then the repayment of the bonds, and will need to be independent.