The government urgently submitted on Tuesday night a legislative amendment with the new framework for the protection of borrowers’ primary residences, although an agreement with the country’s creditors has yet to be reached and Monday’s Euro Working Group reflected the impasse in talks between Athens and the eurozone on the matter.
In order to appease its creditors, the government has decided to narrow the eligibility criteria, although the creditors may not be satisfied and could demand a further reduction of the system’s catchment, in order to ensure that strategic defaulters be excluded from protection.
The ministry was set to table the amendment to an Economy Ministry bill, with a view to having it voted by the parliamentary plenary later this week, probably on Thursday, ahead of the April 5 Eurogroup meeting in Bucharest.
The new framework provides for the payment by protected borrowers of up to 120 percent of the value of their main residence over a maximum of 25 years. The state will contribute to the tranches due depending on the borrowers’ financial condition.
The limit set on the value of the protected residence comes to 250,000 euros, but if a corporate loan is involved then the limit drops to 175,000 euros. Income and secondary property criteria will also apply. The maximum amount of dues per eligible borrower is set at 130,000 euros.
Applications will be made on an online platform, with the framework projected to start applying from April 30, when the platform should be up and running, according to the bill.
The main opposition to the bill is set to come from the European Central Bank, which disagrees with the inclusion in the new framework of corporate loans secured against the borrowers’ primary residence. The ECB also insists on clauses that would avert the protection of strategic defaulters, proposing the repayment by the debtors of 30 percent of their dues in a lump sum if they don’t agree with the settlement proposed by the crediting banks – instead of the payment of 30 percent of each month’s installment, as proposed by the government – until a settlement is reached.