Two years after Parliament authorized the establishment of a dedicated Foreclosure Court, the heralded reform exists largely in name only. Although legislation passed in December 2023 created a Special Jurisdiction for Non-Performing Loans (NPLs), the framework remains unimplemented to date.
The Foreclosure Court was presented as a critical safety net for borrowers, offering the right to appeal to protect a primary residence valued at up to €350,000 from foreclosure. In practice, however, that protection has never materialised. The Supreme Court has ruled that conditions are not yet in place for the law to be applied.
Crucially, the legislation approved by Parliament does not oblige the Supreme Court to proceed with the establishment of the Foreclosure Court. The relevant provision is optional – a legislative loophole that has effectively frozen the entire reform.
As a result, borrowers remain at risk. While borrowers may still rely on pre-existing legislation to challenge loan repayments or dispute loan agreements through the courts, the specialised and expedited protection promised by the Foreclosure Court has failed to appear.
Ecologists reignite the fight for access to justice
The continued non-operation of the Foreclosure Court has prompted the Ecologists party to reopen the debate on citizens’ right of access to justice, particularly in foreclosure cases. Their newly tabled bill seeks to strengthen legal safeguards against abusive clauses commonly found in loan and mortgage agreements.
Last Thursday, the Ecologists submitted a bill to the Plenary of the House aimed at securing the right of mortgagor-debtors – and other interested parties – to apply to a competent court for the suspension of foreclosure proceedings in defined circumstances. These include disputes over the amount allegedly owed and claims relating to abusive or unlawful clauses in loan or mortgage contracts.
The proposal, signed by Ecologists President Stavros Papadouris, applies where a mortgagor-debtor or another interested party has initiated legal action, an appeal, or an application to set aside a court decision issued in favour of a licensed credit institution, a former cooperative credit institution, a credit-acquiring company (vulture fund), or a credit facilities manager. The disputed issues may concern the amount owed, abusive clauses, other illegalities, or even the nullity of the loan or mortgage contract itself.
Importantly, the bill provides that no new warning notice for the intended sale of mortgaged property may be served until a final judgment has been issued on the substance of the dispute across all legal remedies.
Furthermore, even where a court rules in favour of the mortgagee-lender, the debtor retains the right to apply for the setting aside of that judgment if it is founded on abusive clauses within the loan or mortgage agreement.
According to the rapporteur, these safeguards would apply regardless of whether any foreclosure notices were issued before the law comes into force under the existing legal framework governing mortgage sales.
With the new year, the Ecologists intend to push for the bill to be examined by the parliamentary Finance Committee. Resistance is expected from the Central Bank, the Association of Banks and the Association of Credit Acquiring Companies. While the Ecologists may find limited support from other parties, opposition from DISY and DIKO is widely anticipated.
For now, the Foreclosure Court remains dormant — and borrowers remain dangerously unprotected.
We lost our only home last year through the courts worth €500.000, Swiss franc mortgage, any changes to protect borrowers will come too late for us sadly.