Servicers respond to ‘myths’

Servicers respond to ‘myths’

No truly vulnerable household is at risk of being kicked out of their first home, the Association of Management Companies (EEDADP) assured in a statement released on Thursday.

The association noted that “since January 2023, vulnerable borrowers can now enter the online platform, receive a certificate of vulnerability and utilize the possibilities provided by the Intermediate Program of Law 4916/2022. The Interim Program ensures, on the one hand, the immediate suspension of the auction, and, on the other, the payment of a state subsidy toward the loan installment, provided that the borrower will join the Agency for the Acquisition and Re-leasing of Properties. The agency’s solution ensures that vulnerable borrowers can achieve the preservation of their main residence for 12 years through a long-term lease, while ensuring the possibility of repurchasing the property after the end of the above period.”

Given the reported decision by the plenary of the Supreme Court on the question of whether servicers can carry out auctions, EEDADP characterized reports that 700,000 houses will be auctioned as a “myth.”

Based on EEDADP data, the number of properties used as collateral for bad loans amounts to 600,000, but only 50% of them concern residential assets, while the remaining 50% concern other categories of real estate (industrial or other commercial real estate, warehouses, parking lots etc).

As far as residential properties are concerned, the vast majority of debtors, as EEDADP states in its announcement, will find a compromise solution, since based on historical data, eight out of 10 loans are regulated consensually. 

Servicers add that “auctions are always the last resort in a collection process. They are never the first-choice tool for servicers because it is a costly and time-consuming process. In particular, it usually takes two to three years to complete a foreclosure, from the issuance of a payment order to the auction.”

“The commitment of the management companies to the successful consensus process,” EEDADP points out, “is demonstrated by the fact that, in total, up until the end of 2022, they had achieved bilateral arrangements for loans totaling more than 35 billion euros.”

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