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THE CABINET approved on Wednesday the amendments to the bill that were considered after pressure from all stakeholders, including political parties, property developers and home-owners, who wanted certain safeguards to be introduced, despite the Troika’s insistence of harsher measures to ensure than banks could recover assets or auction properties to pay down non-performing loans.

The primary home (ie. the owner is proven to be living there permanently) has been safeguarded only when the owner can prove lack of income or any other asset, thus ensuring low-income families do not lose the roof over their heads.

The new bill says that lenders can auction or sell mortgaged properties without the involvement of state services, even though the two parties may also resort to the Land Surveys Department, that so far had the exclusive right to sell or auction. 

The bill’s provisions include: 

* The sale will begin 90 days after the last due payment (up from the present 30 days), during which time the property owner may seek to restructure the debt or ask for mediation, or even resort to the courts over credit facility disputes, during which time the foreclosure process is suspended. After the 90 days, the lender must notify the owner to settle the outstanding amount or foreclose, with a further 30 days allowed to dispute the action. If the property owner does not conform, the lender will notify of a date of auction, at least 30 days advance of that date, when the owner may once again dispute the final action in court if the terms of the mortgage have been violated, the owner was not notified properly, the notice was issued prior to the expiration of the due date of last payment, or if there is any other outstanding court case. 

* The lender must give ten days’ notice to appoint a property valuer to assess the sale price of the mortgaged property and then appoint a second valuer. The two, and independent of each other, must then deliver their valuation to the property owner and lender within 30 days. If the difference between the two does not exceed 25%, then the sale value is determined by the average of the two. If the difference exceeds 25% then, within five days, the lender must ask the Technical Chamber ETEK to appoint a third valuer who, within a further 30 days, must submit his own assessment. The sale price will be the average of the two median prices of the three valuations. 

*The initial sale is conducted by the lender only by auction which determines the reserve price as 80% of the property’s value and no less. If there is no interest, the lender may try again for up to three months by auction or direct sale, with the reserve price remaining at no less than 80% of the property’s value. If the property remains unsold, only then can the reserve price drop to 50% of the fair value for a period of nine months. The cycle may be repeated, but retaining a reserve price of no less than 50% of the fair value. 

*The lender may buy the mortgaged property only after 12 months from the start of foreclosure. 

*The whole process may be repeated every year until the property is sold. 

* If the mortgaged property is the primary home, then the new bill will be applicable after January 1, 2015, when the credibility (credit ratings) law comes into force, which also provides for the protection of the primary home and a quick resolve of outstanding debts only in the case when the owner is proven not to have any income or other assets.