Homes protection deal sets stricter terms


The new regulations on the protection of the main residence of debtors, agreed on Thursday by the government and the managers of systemic banks, may maintain a relatively large safety net, but sets strict terms that lead to a substantial clearing process through the provisional screening of applications so as to exclude strategic defaulters.

Crucially, the deal reached during a meeting at the Prime Minister’s office provides for the potential inclusion not only of defaulted mortgages in the new system, as the Katseli law provides for until February 28, but also of corporate loans secured on the debtors’ primary residence.

The online platform to be created at the Special Secretariat for Private Debt will incorporate all protection applications pending at the country’s courts, which according to end-2018 data numbered 135,000. Applicants for protection under the law named after former economy minister Louka Katseli, whose cases have not yet reached the courts will have to submit their application again so as to go through a screening process.

No borrowers will get their home protected until the platform has screened their applications to see if they meet the new criteria of a maximum property value of 250,000 euros and of an unpaid balance of their loan up to 130,000 euros.

Whoever chooses to resort to Justice instead of the arrangement proposed by his bank will have to pay 30 percent of his tranche until his case is heard in court.

The borrowers who fail to pay three tranches will lose protection status and their home will automatically revert to the online auction system.

In the next few days the banks will perform their impact assessment test of the measures regarding their capital, so that they can forward the results to the eurozone banking regulators who will the issue their approval for the implementation of the agreement.

A vital condition for the agreement to be implemented from March 1 is the creation of the online platform at the Special Secretariat for Private Debt, although it is not clear whether this is feasible in the few days left until February 28, when the protection under the Katseli law expires.