News Column

Down to the wire on foreclosures bill

September 5, 2014



By Elias Hazou

A HOUSE plenary to vote on the foreclosures bill has been pushed back – again – to tomorrow, with the opposition intent on further tinkering with the contentious law.

The plenum was supposed to convene today, but the opposition parties demanded – and got – an extension as they hammer out amendments to the bill and/or separate legislative proposals geared at providing additional safeguards to distressed mortgagors.

Yesterday the Cabinet approved the final drafts of foreclosures-related legislation, incorporating some but not all the proposals previously made by opposition parties.

The final drafts also incorporate the views of the troika, the government spokesman said.

Some of the latest extra provisions that have got the nod from Cyprus' international lenders are: a borrower's right to use the land registry department's estimate on a property's value, whereas the original version of the core foreclosures bill bypassed the land registry; a clause barring banks' large shareholders from participating in forced sales procedures; protection of property buyers who have submitted a bill of sale but do not have a title deed; and securing debtors' rights where their debt has been sold to third parties, be they credit or non-credit institutions.

Other provisions include an obligation by the Central Bank to provide parliament with quarterly updates, with specific data, on the progress made in debt restructuring; non-payment of taxes or fees in the event a property is transferred to a bank's ownership as part of loan restructuring; and expanding the right for legal assistance for people seeking legal recourse to challenge forced sales procedures underway.

The House finance and interior committees, which convened yesterday, will meet again today to review the government's final-draft bills and press on with their own amendments.

Following yesterday's session, held behind closed doors, DIKO MP and House finance committee chairman Nicolas Papadopoulos said there remained "three to four important subjects, fundamental disagreements."

The troika has made it clear that Cyprus' failure to enact the foreclosures bill now, before the upcoming meeting of eurozone finance ministers, will result in non-disbursement of the next bailout tranche.

And with time running out fast, it looks like the saga will go down to the wire. Party sources said the likeliest scenario is for the opposition to come up with an entirely separate law on foreclosures, incorporating amendments which the troika has vetoed.

This separate law would then be tabled at the plenum along with the government's own foreclosures bill. Both items would pass muster: the parties' separate legislative proposal would have the backing of the entire opposition, where the government's bill would be supported by ruling DISY but also by DIKO, because the separate legislative proposal –incorporating DIKO's additional demands – will have passed also.

Next the President refuses to sign into law the parties' bill, and sends it back to parliament. The House majority refuses to budge, and the President refers the matter to the Supreme Court, meaning the parties' bill has no effect until the court issues a ruling.

Meantime, the government's bill has passed and is in force – triggering the release of the next bailout tranche.

There is an alternative – improbable but dangerous: instead of drafting a whole new separate foreclosures bill, the opposition might decide to table amendments to the government item. To foil these plans, DISY made it clear yesterday they will vote down any amendments other than those approved by the government and the troika. If it pans out this way, the other parties would then retaliate and join in rejecting the government's bill. Result: back to square one.

But the first scenario is the likeliest, the sources said.

"Everyone knows how the parliamentary game is shaping up. The opposition understands that if they bring amendments it will cause a deadlock and problems for the country. I think they're all on board with the first scenario I described, as it allows everyone to save face. The government gets to pass its bill, and the opposition its own bill, although enforcement of the latter is suspended pending the Supreme Court's decision. Also, no one gets the blame for directly torpedoing the bailout programme."

One amendment –sponsored by DIKO, AKEL, EDEK and the Greens – stipulates that foreclosures proceedings on primary residences and business premises under €350,000 be suspended altogether for a number of years. By contrast, the government bill as it stands exempts only primary residences until January 1, without differentiating between the value of the properties. It remains to be seen whether this clause is drafted as an amendment to the government's bill or makes it into a separate legislative proposal.

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Source: Cyprus Mail


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