Cyprus’s parliament passed a broad package of legislation overhauling the country’s non-performing loan and foreclosure framework on Monday, in a session marked by sharp exchanges between parties, personal clashes, and a protest outside the building by citizens opposed to foreclosures.
The plenary approved two Finance Ministry bills and a series of party-sponsored proposals covering borrower rights, guarantor protections, debt limits, and foreclosure procedures.
The session saw DIKO and AKEL trade early blows during procedural discussions, while House President Annita Demetriou and Ecologists leader Stavros Papadouris clashed briefly, raising tensions before order was restored.
The two Finance Ministry bills — amending the law governing the Single Entity for Out-of-Court Settlement of Financial Disputes and the Immovable Property (Transfer and Mortgage) Law — passed by 32 votes to 18 and 37 to 15 respectively.
Guarantors capped
The session’s clearest show of cross-party consensus came on guarantor protection. A bill sponsored by MPs Averof Neophytou, Marinos Sizopoulos, Ilias Myrianthous, Alekos Tryfonidis, Andreas Themistocleous, Alexandra Attalidou, and Kostis Efstathiou passed unanimously with 50 votes. It limits guarantor liability to the original loan amount, minus either the proceeds of any auction or the value at which the lender has recovered the mortgaged property.
Borrowers gain new court access
MPs backed a DIKO bill by Nikolas Papadopoulos — by 29 votes to 18, with one abstention — giving judges in financial cases the power to issue orders setting aside Type IA foreclosure notices. Under the measure, a mortgaged debtor has 45 days from receipt of such a notice to apply for a set-aside order. After 12 months, a creditor may issue a fresh notice unless a court again decides otherwise on special grounds, provided the borrower is not acting in bad faith.
Parliament also passed, by 33 votes to 17, a joint AKEL and Ecologists bill securing the right to seek a court suspension of foreclosure proceedings where debts are disputed or abusive contract clauses are raised. A related AKEL bill restoring borrowers’ right to approach the courts and suspend foreclosure in cases involving unlawful charges or abusive clauses also passed.
Debt limits and auction floors
Several bills introduced new caps on what lenders can pursue. MPs approved, by 29 votes to 18, a proposal by Aristos Damianos, Zacharias Koulias, Panikos Leonidou, Christos Orfanidis, and Alekos Tryfonidis barring lenders from charging additional interest once a debt reaches double the original amount. A separate bill by the same group, passed 30 to 18, provides for the write-off of any residual debt when foreclosure proceeds fall short of full repayment.
An Ecologists bill by Papadouris — passed 47 to one — sets a minimum sale price of 50 per cent of a property’s value in cases of repeated auctions. ELAM’s proposal prohibiting lenders from demanding additional securities when a loan is already covered by the value of the mortgaged property passed by 38 votes to 14.
Parliament also approved, by 31 votes to 16 with two abstentions, a bill by Koulias and Orfanidis requiring creditors to exhaust all remedies against the primary debtor and securities before pursuing guarantors.
Primary residences shielded until August
A DEPA bill suspending foreclosures on primary residences worth up to €350,000 passed by the narrowest margin of the session — 30 votes to 23 — and will remain in force until August.
Ombudsman framework expanded — despite her objections
Parliament approved by 34 votes to 18 a bill strengthening the Financial Ombudsman’s debt confirmation mechanism to allow more scope for debt restructuring.
The revised framework makes the Ombudsman’s rulings binding in disputes of up to €20,000 and widens borrowers’ access to the Ombudsman in complaints against financial institutions. Borrowers may now file a complaint on receipt of either a Type I or Type IA foreclosure letter.
The bill passed despite the Financial Ombudsman’s own opposition. She had argued that certain provisions would limit and weaken her office. Her position was not adopted, and a clause allowing banks to legally challenge her decisions — even on their merits — remains in force.