Six criteria for debtor eligibility in new home protection system


Debtors will have to satisfy six criteria in order to be eligible for the primary residence protection scheme outlined in a new draft bill that the government is expected to bring to Parliament in the course of the week.

The draft bill, which has been seen by Kathimerini, foresees banks offering a possible reduction of the outstanding capital under very strict conditions and after inspecting in detail all the income and property data of each debtor.

An online platform that will be created at the Independent Authority for Public Revenue, meanwhile, will be designed to root out strategic defaulters, and combined with the lifting of bank secrecy for the entire period of the payment plan on offer, it will also serve as a stick against debtors who took advantage of the so-called Katseli law to hide behind the time-consuming and bureaucratic procedures in courts. The carrot, moreover, will be a subsidy offered by the state, which, according to all estimates, will operate as an incentive for debtors to provide all their details to the electronic platform for inspection.

Borrowers wishing to enter the new protection scheme will need to meet the criteria in the following categories: The outstanding balance of the nonperforming loan, the taxable price of the main residence known as “objective value,” income level, the total value of one’s properties and bank deposits. Borrowers will also need to prove that they have not been denied protection under the Katseli law for hiding information.

The European Central Bank insists that the property criterion becomes stricter than foreseen in the new bill.

Debts that qualify under the new system are those with a delay of more than 90 days by December 2018. Any overdue arrears after that date can only be included in the new mechanism provided that the borrowers or their spouse or a dependent member of their household has a 67 percent disability or is registered unemployed.

The payment plan provides for a period up to 25 years, unless the age of the debtor exceeds 80 years by the end of the plan. For a debtor to be ejected from the mechanism he or she will have to miss three consecutive tranches.

For debts whose pending balance exceeds 120 percent of the commercial value of the main residence on which they are secured, banks may reduce the arrears.