Nicosia, Cyprus. The House plenary this week received a series of bills to tighten the framework governing foreclosures and strengthen protections for loan guarantors, amid political pressure over the handling of non-performing loans.
Reserve sale price requirement
Two proposals tabled by MP Stavros Papadouris seek amendments to the Immovable Property (Transfer and Mortgage) (Amending) Law.
The first proposal provides that, where attempts to sell a mortgaged property continue beyond six months from the completion of the first auction, the obligation to apply a reserved sale price must remain in force.
The bill stipulates that the reserved sale price cannot fall below 50 per cent of the property’s market value.
Expanded role for the Financial Commissioner
A second proposal by Papadouris would grant the Financial Commissioner the power to examine complaints relating to debt confirmation after the borrower receives a Form “I” notice from the mortgage lender, expanding oversight at that stage of the foreclosure process.
Proposed freeze on certain primary residences
Separately, MPs Marios Karoyan, Alekos Tryfonides and George Penintaex submitted a bill providing for a freeze on the disposal of primary residences valued at up to €350,000 until the end of 2026.
Measures affecting guarantors
Further amendments were proposed by MPs Zacharias Koulias and Christos Orphanides, focusing on the position of guarantors.
Their bill would require a mortgage lender to exhaust all available remedies against the primary debtor and all real collateral before taking any action against a guarantor, including proceeding with the sale of the mortgaged property and securing a court judgment against the primary debtor.
In addition, where a mortgaged property serving as security for a loan with guarantors is sold under Part VIA of the law or acquired by the lender, the guarantor’s liability would be capped at the principal amount set out in the guarantee agreement.
Which of these proposed changes to the foreclosure framework do you think would have the biggest impact on borrowers and guarantors?