The Foreclosure Court, established by a decision of the Parliament, has remained a matter of words and paper for two years. Although Parliament approved the much-publicised legal framework to set up the Special Jurisdiction for Non-Performing Loans (NPLs) in December 2023, the law has not yet been implemented.
Borrowers should have been able to appeal to the Foreclosure Court to shield their primary residence, valued up to €350,000, from foreclosure. However, the Supreme Court has deemed that conditions are not yet suitable for the law to be applied.
Significantly, the legislation passed by Parliament does not mandate the Supreme Court to proceed with the establishment of a Foreclosure Court; the specific provision remains optional.
Nevertheless, citizens can still use existing legislation to appeal to the courts regarding loan repayments or to challenge loan agreements.
Ecologists Push to Restore Right to Justice
Due to the failure to operate the much-discussed Foreclosure Court, the Ecologists party is reviving the debate over citizens’ right to appeal to justice. Their proposed bill includes provisions that protect citizens from abusive clauses found in loan agreements.
Last Thursday, the Ecologists tabled a bill before the Plenary of the House that aims to secure the right of the mortgagor-debtor, and other interested parties, to appeal to a competent court for the suspension of property foreclosure proceedings in specific cases. These cases include challenging the amount owed and citing the existence of abusive clauses in loan or mortgage agreements.
The bill, signed by Ecologists President Stavros Papadouris, applies:
“In the case where the mortgagor-debtor or another interested person has lodged a legal remedy or where any action or appeal against a court decision, or an application for setting aside a court decision issued in favour of a licensed credit institution or former cooperative credit institution or credit acquisition company or credit facility manager, is pending before a competent court, in which proceedings the disputed issues include either challenging the amount owed or citing the existence of abusive clauses in the loan or mortgage agreements or citing any other illegalities or due to the nullity of the loan and mortgage contracts”.
Additionally, the bill stipulates that no new warning letter for the intended sale of mortgaged property can be served on the borrower until a final decision is issued on the substance of the dispute across all legal remedies.
Furthermore, should a court rule in favour of the mortgagee-lender and against the debtor, the latter reserves the right to apply to set aside the judicial decision if it resulted from abusive clauses in either the loan or mortgage contract.
The rapporteur argues that the proposed regulations will apply regardless of whether any notices were sent to the mortgagor-debtor or other interested parties under the provisions of the main law governing the sale of mortgaged property by a mortgagee-lender before the law’s commencement.
With the new year, the Ecologists will demand that the bill be scrutinised by the parliamentary Finance Committee. Opposition is certain to come from the Central Bank, the Association of Banks, and the Association of Credit Acquiring Companies. While the Ecologists may find “allies” among other parties, DISY and DIKO will most likely disagree.