foreclosure reform — foreclosure reform — MPs are calling for urgent changes to Cyprus’ foreclosure laws, emphasising the need for greater protection for borrowers and guarantors. Akel MP Aristos Damianou, during a session of the House finance committee, articulated that his party has been advocating for a decade to rebalance the power dynamics between banks and the rights of individuals facing foreclosure.
Damianou stated, “The most basic right is unhindered access to justice,” which he believes is crucial for allowing borrowers to suspend the sale of their primary residences or small business properties in cases where loan balances are disputed or where abusive clauses are present.
He expressed frustration over the slow legislative process, highlighting that similar reform efforts in the past have failed. “Bills submitted by Akel and other parties need to be discussed by February,” he urged, pointing out the urgency of the situation. He recounted that on Christmas Day, individuals were being evicted due to the current laws, which he described as inadequate. According to him, the finance minister has not adequately considered the proposals put forth.
Adding to the conversation, the president of the Ecologists party, Stavros Papadouris, stressed the need to address auction laws promptly. He highlighted a bill that was resubmitted in December 2023, which aims to enable courts to determine the legal amount of debt before any auctions can take place. He noted, “In Cyprus, the completion of an auction is allowed within nine months to one year, while the determination of the legal amount of debt through the courts can take seven to nine years,” illustrating the inefficiency of the current system.
Papadouris also raised concerns about abusive clauses in non-performing loans, which disproportionately affect guarantors. The renewed push for reform has reignited tensions within parliament, with members from Disy and Diko expected to oppose both bank taxation proposals and changes to foreclosure laws. They defend the legislation approved in 2023 that established a special foreclosure court, but the provision allowing the supreme court to create such a court remains optional, limiting borrowers’ avenues for recourse.
The human cost of foreclosures has been a recurring theme in previous discussions. Last November, the House refugees committee urged loan acquisition companies to pause foreclosures for three months to facilitate negotiations with vulnerable borrowers. Committee president Nikos Kettiros indicated that if there is no progress, parliament may consider legislative measures to safeguard these individuals.
This debate is shaping up to be a pivotal issue in the upcoming election campaign, with Akel calling on other parties, including Dipa and Edek, to unite against what it refers to as the “bank lobby.” Papadouris warned, “We are at a point where serious political decisions must be made.”
The bills currently on the table aim to restore borrowers’ rights, allowing them to challenge auctions, curtail abusive clauses, and enhance judicial oversight, all while ensuring that licensed credit institutions remain stable and adequately funded.
