Our View: Should bad debtors be given more slack?
Thirteen years after the economic meltdown and the collapse of the banking system, Akel is still talking about the “protection of borrowers.” The party mouthpiece, Haravghi, reported on Tuesday that the Akel initiative for the “formulation of a meaningful framework for the protection of borrowers from the arbitrariness of the banks and the loan management companies, brought back the matter of the foreclosures to the House.”
The party re-tabled the law proposal that has been pending since 2023. If approved, the bill would allow borrowers go to court and apply for a suspension of foreclosure of the primary residence, in cases of “illegal charges and exploitative provisions.” It is unbelievable that Akel is still dealing with foreclosures, so many years after the crisis. According to Haravghi’s report, the Banking Association platform e-auction had 456 property auctions scheduled for the next few days.
Of these, 122 were houses and apartments of which 110 were of small to medium value – less than €350,000. Some 158 were plots and fields with buildings on them, but most significantly 408 of the properties were valued at less than €350,000. Are we to conclude that because the value of the properties is relatively low, they should not be foreclosed? That the borrowers should carry on not repaying their loans? Should they be able to go to court and delay the inevitable foreclosure for a few more years?
Surely, the fact that there are still primary residences that are threatened with foreclosure cannot be blamed on the banks and their excessive charges but on the people who still find excuses to refuse to pay their housing loans. The bad debtors have been given plenty of opportunities to repay their housing loans. The government had passed a scandalous law by which the taxpayer would cover part of a bad debtor’s loan, and the bank would also take a hit to help the repayment and thus protect primary residences. The bad debtors were rewarded for not repaying their loans with help from the taxpayer, but many did not take it, because they still have to pay part of the loan.
But Akel still wants to help the bad debtors by giving them the legal power to delay foreclosures even longer. In any country with rule of law, it does not take a decade to foreclose a property, even if it is the primary residence. Nor do the politicians believe they have a responsibility to ‘protect’ a homebuyer that has refused to repay his/her loan for years. In Cyprus, we have somehow managed to present people who refuse to pay their bank loans as victims that need legal protection. It is quite an achievement.