Govt', institutions agree on three-year plan to protect home owners‏

Gazzetta team 17 Νοεμβρίου 2015 - 18:42

An agreement reached between the Greek government and the institutions envisages subsidizing installments of mortgage loans for the more vulnerable households and writing-off part of households’ debts for households with annual income up to 35,000 euros and real estate property worth up to 230,000 euros.

This agreement, covers 25 pct and 35 pct of borrowers respectively, up from 16 and 20 pct of borrowers with non-performing loans proposed by the institutions initially.

The agreement will offer full property protection for the most vulnerable households – or a four-member family with annual income of up to 20,000 euros and property assets worth 170,000 euros. For households with annual income up to 35,000 euros, courts will determine the monthly installment on mortgage loans based on the current commercial value of a first home. Finance Minister Euclid Tsakalotos, speaking to reporters, said that mortgage loans were the most precious assets of banks and noted that banks themselves have no interest in moving forward with foreclosures as prices are currently low and there was a prospect they will rise.

Tsakalotos said that a Katseli law offering protection to home owners was good during the period of economic downturn but failed to resolve the non-performing loans issue, adding that banks must be able to offer more loans after completion of a recapitalization plan.

This regulatory framework for protecting home owners will have a duration of three years, with a revision of this framework expected to be examined at the end of that time, based on future conditions in the market.

NPLs are currently estimated at 40 pct of total loans in Greece, sharply up compared with a 5-7 pct rate in the European Union.

The two sides agreed that in the next round of negotiations to examine a strategy on resolving the non-performing loans issue in total, offering a variety of solutions for different categories of loans (large corporate, small- and medium-sized enterprises, housing and consumer).

Tsakalotos said that negotiations with the institutions will continue until Friday when a new Eurogroup Working Group meeting will be held to examine legislation expected to be approved by the Greek Parliament on Thursday and to approve disbursement of a 2.0 billion euros installment to Greece.