Banks want to begin auctioning off foreclosed property again, beginning in October.
Such auctions have been put on hold during the coronavirus pandemic, but banks, which have securitized bad debt, funds, which want to buy such debt, and servicers, which manage loans, are all pressuring for the lifting of the moratorium.
Restarting auctions is considered vital in view of the planned securitization of debt, which requires a clear regulatory framework in order to attract investors willing to buy securitized debt.
Three of Greece’s “big four” retail banks – Alpha, National and Piraeus – are planning such securitizations, worth €25 billion, in the coming months and all think that bringing back property auctions will boost investor confidence.
The ability of banks to proceed with auctions affects the pricing of the upcoming securitizations and any extension of the freeze will lead to the lowering of the valuation of the debt portfolios for sale.
Property auctions have been frozen since March; the payment of installments on housing, consumer and business loans has also been suspended. This moratorium on loan repayment involves nearly €20 billion in indebtedness, and for a significant portion of these loans it has been extended to the end of the year.
According to bank data, of the loans whose repayment was subject to a three-month moratorium, ending in June, about 70-80% are now being repaid on schedule. This creates some optimism that the pandemic crisis will not create too much extra debt.
Those who have mortgaged their main residence to take out housing or business loans can apply for relief through the Gefyra (“Bridge”) program that subsidizes repayment for nine months. The deadline to apply is the end of September. Bank and fund managers say that those who haven’t settled on a repayment schedule by then should be considered “strategic non-payers.” “The liquidation of their property is the only way to force them into a settlement with the bank or funds,” they say.