After the Cypriot banks, the Association of Companies Engaged in the Management of Problem Loans and Mortgaged Real Estate (SEDP) has decided to stop selling mortgaged real estate that is owned by people who are having money problems and can't get the deeds to their homes.
The SEDP said it will not hold any auctions until 31 July 2025.
The association said that this is the last time the moratorium will be granted, and it will apply to people who have already submitted an application to the Land Registry. This is in accordance with the Transfer of Title and Mortgage Law of 2015. The application is for the purpose of obtaining a separate title deed. The association hopes that the parliamentary committee on legal issues and the Cyprus Land Registry will help to solve this important issue. This issue has affected thousands of legitimate buyers who have been in a difficult situation for many years.
This is a situation where loan companies can't sell property because the Land Registry has registered applications from buyers who are in a vulnerable position. This stops the sale and means that the problem of non-performing loans cannot be solved, SEDP said.
The SEDP also said that the only way to get borrowers to talk about how to pay back their loans is to start selling their houses.
It should be remembered that a temporary ban on selling mortgaged property has been in place in Cyprus since 2020 and has been extended several times during this period.
This has worried the people in charge of banking in Europe, especially the European Central Bank (ECB) and the European Commission. They have told the Cypriot authorities many times that they need to look again at how they are dealing with this problem.
According to ECB representatives, political interference in the repossession of mortgaged assets undermines the institutional framework within which banks are supposed to operate. Rather than making things harder, new laws should help to reduce the number of non-performing loans, and support the recovery of the banking sector.
The criticism is about more than just the changes to the law on selling mortgaged property. It is also about the national regulator being too easy on the constant delaying of the implementation of existing legislation. The first suspension started in March 2020 and was then extended until August of the same year. Since then, similar delays have happened almost every three months. This has happened on purpose and without a plan to solve the situation.
This means that the country's banks have too much collateralised real estate that cannot be sold. This, in turn, slows down the flow of money, makes the situation for financial institutions worse and puts more pressure on Cyprus' credit rating, which is just above investment grade. Extending the moratorium again and again makes the problem worse. It creates a cycle that will become more and more difficult to break, the longer it continues.