ATHENS – Breaking yet another promise, the ruling Radical Left SYRIZA-led coalition has authorized the sale of mortgages and bad loans from beleaguered Greek banks to private funds who will have the power to foreclose, even on primary residences that Prime Minister Alexis Tsipras swore would be protected.
The government, which includes the pro-austerity, marginal, jingoistic Independent Greeks (ANEL) also will let homes be taken electronically online to get around violent protests at courthouses where demonstrators were threatening notaries.
The targets of those e-foreclosures were said to be mostly strategic defaulters who owe more than 300,000 euros ($352,000) and as banks gave verbal promises not to go after primary residences under that threshold.
But the sale of mortgages to the private funds means banks can get rid of those properties which could still be seized, rendering Tsipras’ promises useless.
As of January, funds will be able to buy all kinds of loans, including those collateralized by main residences with a taxable value of less than 140,000 euros ($164,549), greatly opening the pool of homes that could be foreclosed on, said Kathimerini.
The restriction was the only obstacle keeping funds away from loans secured by main residences, as well as properties covered by the provisions of the so-called Katseli Law that protects debtors’ assets.
When a fund buys mortgage secured loans, they also take on the role that the bank had to date, as the mortgaged assets are transferred along with the loans, which means the funds could set the terms for demanded payment or take the home.
Banks also want to sell loans that aren’t secured by property as collateral as bad loans make up half their portfolio during a crushing 7 ½-year-long economic crisis that has left many of those hit with big pay cuts, tax hikes, slashed pensions and worker firings unable to pay mortgages, credit cards and other obligations.
Bank officials had said that that property-secured loans will only be sold if the target to reduce the amount of bad loans isn’t met, which means people who can’t pay personal loans and credit cards are next.
The former ruling New Democracy and its then-partner, the previous PASOK which fell out of favor for reneging on anti-austerity promises, are essentially exempt from having to pay 250 million euros ($293.84 million) in bad loans granted by banks with almost no collateral being put up. The bank officers who authorized them were given immunity from prosecution.