Parliament approved a package of laws on loans and foreclosures on Monday, passing two government bills and a series of party proposals aimed at strengthening protections for borrowers and guarantors, regulating foreclosures and improving the framework for resolving disputes.
As the House moved to debate the measures at its final plenary sitting before dissolution ahead of the elections, a crowd gathered outside parliament to protest over foreclosures. People demonstrated over foreclosures, with banners reading: “Parliament, listen to us well, our homes are not for the predators”, “Right to housing for all”, and “Do not become accomplices in the robbery by funds and banks”.
The two government bills amend the laws on the Single Financial Disputes Resolution Body and on the Transfer and Mortgage of Immovable Property. They were approved by 32 votes to 18 with one abstention, and by 37 votes to 15 respectively.
Under the changes, the role of the Financial Ombudswoman is strengthened, debt restructuring can be pursued through a debt verification mechanism and the ombudswoman’s decisions become binding in disputes of up to 20,000 euros, although banks retain the right to challenge those decisions in court. Borrowers will also be able to turn to the ombudswoman earlier, from the point they receive the Type I letter, while a Personal Repayment Plan through an insolvency adviser is introduced as a last-resort measure to prevent the foreclosure of a primary residence.
Parliament also approved a series of party proposals. These include measures allowing court applications to suspend foreclosures in cases involving disputed debt or allegedly abusive clauses, the write-off of any remaining debt when foreclosure proceeds do not cover the full amount owed, a ban on extra interest once a debt reaches twice the original amount, and a minimum sale price of 50% of a property’s value in repeat auctions.
Lawmakers also approved measures limiting guarantors’ liability to the original amount of the loan and requiring creditors to first exhaust action against the principal debtor and the collateral before pursuing guarantors. Another approved proposal provides for a temporary suspension until August of foreclosures on primary residences worth up to 350,000 euros.
The debate in the House was politically charged, with clashes over responsibility for the financial crisis and over whether some of the measures could face constitutional challenges. AKEL and other opposition and independent MPs argued that the existing framework had favoured banks and credit-acquiring companies at the expense of borrowers and guarantors, while DISY MPs warned that broad interventions could affect legal certainty and the stability of the financial system.
DIKO defended its proposal for a court-ordered 12-month suspension of foreclosures as a balanced approach, while AKEL said its own proposals were aimed at restoring meaningful access to justice in cases where debts or contractual clauses are contested.
During the debate, several MPs also warned that passing multiple overlapping measures at the same sitting could create legal conflicts and increase the risk of referrals on constitutional grounds. DISY MP Averof Neophytou said the core problem remained unresolved for thousands of borrowers who still could not service their loans and argued that broader solutions would also be needed through agreements with banks and credit management companies.
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