Nicosia, Cyprus. The Association of Cyprus Banks has warned that proposed legislative changes to Cyprus’ foreclosure framework could have negative consequences for credit institutions and the wider financial system as parliament prepares to debate amendments.
Submission to House finance committee
The association submitted a written note to the House finance committee, which is examining proposals to amend the country’s foreclosure legislation.
It said that possible approval of the proposed laws would have negative consequences for credit institutions, the stability of the financial system, and possibly the credit rating of the Cypriot economy because they would suspend the timetable and procedures for property foreclosures.
Concerns over proposed amendments
The organisation said its members have expressed strong concern over the proposed amendments to the foreclosure framework currently under discussion in the legislature.
According to the association, the existing legal framework for property foreclosures already contains procedural mechanisms for borrowers seeking relief.
Existing avenues for borrowers
The association said that where there are valid reasons to halt foreclosure proceedings, debtors can obtain a prohibitory court order or submit complaints to the Financial Commissioner regarding charges, abusive clauses, or mediation.
It also warned that repeated attempts to amend the foreclosure framework through various legislative proposals risk making the foreclosure process ineffective and inefficient, and could make debt recovery more difficult due to time-consuming delays in the courts.
Private debt cited as ongoing challenge
The association said Cyprus continues to face the challenge of very high private debt, which it said has been repeatedly highlighted in assessments by international institutions.
It said that in evaluation reports on the Cypriot economy published by credit rating agencies, the European Commission, the International Monetary Fund and others, management of very high private debt remains the greatest challenge for the economy, adding that the problem requires holistic management and a definitive settlement.
What impact do you think further changes to the foreclosure framework could have on Cyprus’ efforts to address private debt?