Gov’t plan for foreclosures foresees five-year suspension
Three main criteria will be used to decide whether banks should foreclose on primary residences from next January, government sources have told Kathimerini.
The decision to end the moratorium on home repossessions comes amid concerns from the banking sector that the proportion of nonperforming loans (NPLs) could exceed 30 percent this summer.
Prime Minister Antonis Samaras and Deputy Prime Minister Evangelos Venizelos agreed on Thursday that the suspension of foreclosures, first applied in 2009 and renewed each year since then, should be lifted from next year. There are fears that the lack of foreclosures are distorting the property market and the auctioning of some homes could rekindle buyers’ interest.
In the first quarter of this year, only 4,600 properties changed hands and many of these were houses that were passed from parents to children. It is estimated that there are currently about 150,000 unsold homes in Greece. Government sources said that up to 280 professions are relying on the collapsing construction sector receiving a boost.
According to the measures being discussed by the Finance and Development ministries, the government will introduce a five-year suspension on foreclosures. This means that homeowners will have five years from when they stop making mortgage repayments to when their home is seized. However, the moratorium will apply retroactively. The government believes this would lead to between 6,000 and 7,000 homes a year being auctioned.
Another criterion will be what effort the homeowner has made to repay his or her mortgage. Finally, the objective value of the property, as set by the tax office, will be taken into account. Currently, the limit is set at 200,000 euros but the government is considering reducing this by up to 10 percent per year.
According to Bank of Greece figures, 22.9 percent of mortgages were not being paid at the end of March, while the overall proportion of NPLs was 27.8 percent, which amounts to 63.6 billion euros. However, banking executives fear that the proportion of NPLs had risen to 30 percent by the end of June, although official figures are not available yet. They believe that if the issue of nonperforming loans is not addressed, banks could need a fresh injection of capital.
