ECONOMY

Private funds to back entity for debtors

private-funds-to-back-entity-for-debtors

Private investment funds will undertake the new entity for the acquisition and re-leasing of properties. This is the corporation planned to buy the homes of debtors with mortgage loans secured against their main residence who fail to service their loans.

The new bankruptcy draft law includes a provision for the creation of an entity to acquire the properties banks and funds auction, thereby allowing vulnerable households to continue living in their homes by paying rent.

Originally this was going to be a state entity, exercising a form of social policy, but this has now been reversed after the reaction of the country’s creditors, especially the European Central Bank, that said this would allow strategic defaulters to “park” their main residence in the state’s ownership and keep living in it without any consequences.

Therefore Kathimerini understands the government is planning to concede this activity to a private party after an international tender. The new entity, to be created through private funds, will relieve the state of the purchase and operation of those assets, while debtors that fail to pay the rent will be evicted.