NICOSIA – Cyprus’ supreme court on Oct. 31 said a government plan to allow fast foreclosures and property repossessions to satisfy international lenders could move ahead, nullifying four bills passed by Parliament to protect homeowners and debtors.
The Cypriot supreme court ruled the bills unconstitutional. The measures had prompted the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is putting up 10 billion euros in a bailout to halt the monies temporarily.
The decision benefits international bankers but means people who can’t pay their mortgages or bills because of austerity measures attached to the loans will lose their homes and properties swiftly. The court said the government can move to let banks seize the properties in months instead of years, taking away rights given to debtors.
The decision should open the way for Nicosia to receive the next tranche of 436 million euros, which was blocked last month but will see many Cypriots wiped out because of bad loans Cypriot banks made to failed Greek businesses and big holdings in devalued Greek bonds. No banker has been held accountable.
EU finance ministers objected to the bills, adopted to soften the impact of a new law governing foreclosures on loans required as part of the adjustment program linked to the bailout.
The objective of the new law is to streamline bank foreclosures of bad debts as demanded by Troika. The law ensures foreclosures cannot be indefinitely delayed, reducing the process from years to months, establishing procedures for valuing properties and auctioning them.
Among some of the objectives of the bills that were thrown out were efforts to dilute the law’s effect on low-income groups and to prevent widespread repossessions of property.
Last week, Fitch ratings agency said the banking environment remains challenging, given poor asset quality. Bad loans have hit 50 percent of total bank lendings, or 157 percent of the country’s Gross Domestic Product.