Greek parliament approves foreclosure protection bill

March 29, 2019

ATHENS (Reuters) – Greece’s parliament approved on Friday a bill to protect borrowers from foreclosures on their primary homes after tense negotiations with the country’s international creditors.

The new framework, part of measures to expedite a clean up of bank balance sheets, was approved by a majority of lawmakers in the 300-seat parliament. It replaces an older scheme which the euro zone creditors considered more generous.

A wrangle over rules to protect thousands of borrowers in default on their loans from losing their primary residence delayed the release of 974 million euros from Greece’s euro zone creditors earlier this month.

Greece emerged from its latest bailout in August. The leftist government, whose term ends in October, has said that the new legislation protects those hit hardest by the debt crisis but it has also called the bill “a product of compromise”, following talks with EU representatives.

The new scheme sets income criteria and a ceiling on the commercial value of primary residences at 175,000 euros for business loans that have pledged a primary home as collateral and at 250,000 euros for other plain vanilla mortgages.

The state will also contribute to help borrowers, subsidising part of their monthly loan repayments. The total annual cost is seen at 200 million euros, according to the bill.

The lenders, which extended loans worth more than 280 billion euros in three bailouts from 2010 to 2015, have pushed for stricter terms. They initially wanted business loans exempted from the protection.

Negotiations continued until Thursday and Athens submitted a last-minute amendment to reduce the outstanding balance on business loans, including past due interest, to 100,000 euros from 130,000 euros.

To conclude its second-post bailout review and qualify for the cash – mainly from profits that euro zone central banks have made on their Greek bond portfolios – Athens needs to get the green light from official lenders on the new framework.

Euro zone deputy finance ministers assessed Greece’s progress on this issue on Monday and did not approve the release of cash. They will look into it again before a meeting euro zone finance ministers on April 5, an EU official said.

Greece has promised to reduce the pile of non-performing loans burdening its banks’ balance sheets.

(Reporting by Renee Maltezou; Editing by Raissa Kasolowsky)

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