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Cyprus’ political parties convened yesterday to continue fervent discussions regarding the controversial drafted foreclosures law.

All parties, excluding ruling Democratic Rally, expressed their disapproval of the proposed foreclosures legislation and requested that the Government renegotiate with its Troika of international lenders regarding the specifics of the bill.

At the joint session of the Parliamentary Committees on Financial and Budgetary Affairs and Internal Affairs however, Interior Minister Socratis Hasikos informed committee members of the Troika’s rejection of suggested legislation amendments, submitted by parliamentary parties, ruling out further negotiation efforts.

Finance Minister Harris Georgiades, who also participated in the meeting, expressed his support of the proposed bill, further suggested that foreclosures proceed for various property types.

“Foreclosures should not proceed only for villas. They should proceed also for an apartment for which the borrower has not paid a single bank installment since it was bought”, he said, adding that “tolerance is unfair” to depositors who continue to pay their dues despite financial challenges.

“The key to addressing the accumulated debt is the restructuring of loans”, Georgiades noted, adding that the Cabinet has approved an outline of amendments to existing laws in the form of the insolvency framework which refers to the restructuring of loans, aimed at giving a second chance to borrowers that are struggling to pay their debts.

This framework must contain the tools needed for the banks to recover loans from debtors that do not cooperate or debtors with unsustainable loans, he said.

Hasikos, meanwhile, commented that the foreclosures legislation is not aimed at extensive foreclosures on mortgaged properties, but instead at correcting the current law. The bill aims at exerting pressure on both the debtor and the bank to negotiate the restructuring of loans, he explained.

The Government has drafted a scheme under which the state - through the Cyprus Land Development Corporation - will help those who cannot pay their loans and have exhausted all available options, to keep their primary residence, either by buying their home or by paying the interest on their loan, which the debtor later would have to pay back to the state.

Attorney General Costas Clerides noted that under the legislation, the debtor has the right to participate in the foreclosure process by appointing an appraiser.

Central Bank Governor Chrystalla Georghadji stated that non-performing loans are the biggest problem of the four banks in Cyprus that will undergo the 2014 EU-wide stress tests carried out by the European Banking Authority.

Georghadji said that there are borrowers who cannot pay their bank instalments and others who “naively believe that they punish the banks by not paying”.

Cyprus’ Troika of international lenders – comprising the European Commission, European Central Bank and International Monetary Fund – has stipulated that the bill be approved prior to the upcoming Eurogroup meeting of mid-September.