The procedure by which banks in Cyprus foreclose on property is often confusing and the law misinterpreted; Christiana Achilleos, a Senior Litigation Lawyer, provides an outline of the legal framework.
Moody’s rating agency has warned that changes to the foreclosure law will lengthen the time it takes for banks to foreclose on properties making it more difficult to reduce their NPLs.
The banks have bought nearly 650 properties that failed to sell at the first round of auctions since the start of 2018 according to information submitted to parliament by the Cyprus Central Bank.
Phileleftheros reports that during the second quarter of 2018 banks sent almost double the number of letters warning borrowers that they intend to foreclose compared to the first quarter.
The new foreclosure bills passed by the Cyprus parliament expedites foreclosure proceedings, makes it easier for financial institutions to remove bad loans from their balance sheets, and increases the number of borrowers eligible for insolvency schemes.
Officials from the government and the Cyprus Central Bank have warned that a bill seeking to exempt pre-2014 mortgages from the foreclosure laws would wreak havoc on banks' balance sheets.
The government backed primary residences protection bill designed to protect an estimated 200 crisis-stricken homeowners against foreclosure has failed MPs heard on Monday.
The Larnaca District Court has banned banks from foreclosing on properties used as collateral for loans for which courts gave the go ahead before the new foreclosure law came in effect last year.
The auctions by the Bank of Cyprus of ten properties valued in excess of €2.3 million got underway last week with just three of the seven plots in Paphos being sold yielding a total of €1.05 million.
