After much debate and discussion, the Cyprus Association of Banks announced that local financial institutions have decided to impose a moratorium on the sale of mortgaged properties whose owners are stranded because they cannot obtain Residential Titles in any way.
They were also joined by distressed loan management companies.
Thus, borrowers got another reprieve. This time until 31 December 2024. The Cyprus Association of Banks said that the main purpose of this initiative is to support the efforts of the government and the Central Bank of Cyprus in the issue of collateral sales. It should be noted that it is not for the first month there are debates between officials regarding the expediency of sales of problem properties. Earlier, Cyprus Interior Minister Constantinos Ioannou said that of the 9,497 problem cases under consideration by the department, 5,417 properties have no title.
Recall that the moratorium on the sale of mortgaged property in Cyprus has been in force since 2020. Because of this, the Cypriot authorities have repeatedly received a corresponding signal from the European Central Bank (ECB) and the Commission.
The heads of these supervisory bodies, are concerned about political interference in the sales law. According to the ECB, changes in the institutional framework for asset sales are not permissible. On the contrary, the legislature should take care to make changes that would support banks' efforts to reduce NPLs rather than lead to a possible increase in them.
The reluctance of supervisors is not limited to amendments to the law in question, but nevertheless extends to the ‘tolerance’ of the national banking supervisory authority to continuously agree to suspend the enforcement of the divestment law. Thus, the first suspension of sales was made for the period from March to June 2020, then it was extended until August, the next suspension covered the period from December to March 2021, the fourth moratorium was imposed from April to July 2021 and so on ad infinitum.
It must be said that the financial institutions of Cyprus are awash with mortgaged properties, which they cannot sell due to the constant postponements. And new extensions of the moratorium only increase their number. In addition, this entails a decrease in the country's credit rating and increases the cost of borrowing on the capital markets for the government, given that Cyprus' rating is already at the minimum investment level.