KEDIPES has processed part of the applications from Cypriot residents who have expressed a desire to participate in the Mortgage to Rent programme.
On Wednesday 26th June, its head Lambros Papadopoulos announced that the first approved beneficiaries have started to receive their letters.
According to Papadopoulos, the authority has now received 2,092 applications, of which 1,448 have been found eligible for the scheme. Meanwhile, Papadopoulos reminded that the scheme will run until 6 September 2024. Around 3,000 people are expected to benefit from the first phase of the scheme.
The process of sending approval letters to the first borrowers has already started," the KEDIPES head said, stressing that the number of borrowers will increase significantly in the coming weeks.
As a reminder, the Mortgage to Rent scheme covers overdue loans secured by a primary residence of up to €350,000.
Beneficiaries are low-income earners and pensioners, whether or not they have applied to join the ESTIA and Oikia schemes.
The programme is also open to borrowers who have defaulted on their mortgage, but whose application to join the ESTIA and Oikia schemes has been rejected because they were deemed unviable due to their low income.
A separate company, KEDIPES EED Ltd, has been set up to administer the new scheme and maintain separate accounting records, including a fixed asset register. As part of the scheme, arrangements have been made to insure the properties that will come into the ownership of KEDIPES.
Call centres and service points have also been set up in 5 towns in Cyprus, staffed by qualified personnel who can answer any questions the public and those interested in participating in the scheme may have.
KEDIPES' main role in the Mortgage for Rent scheme is to purchase non-performing loans and other high-risk assets from Cypriot financial institutions.
By transferring non-performing loans to the balance sheet of a "bad bank", the Cypriot banking system will be able to rid itself of toxic debts totalling €10 billion. In turn, small borrowers will be less vulnerable to foreclosure of their primary residence if they default on their loans, as they will be able to participate in the Mortgage to Rent programme.
As planned, KEDIPES will purchase the mortgages from the borrowers. The troubled borrowers will then have the opportunity to rent their property from the "bad bank" for 14 years. During this period, they will be charged rents at 65 per cent of the market average. The rent will be set individually for each property.
At the end of the term, they can get the property back if they pay the arrears. The current price of the property for borrowers in arrears is equal to the price at which KEDIPES purchased the property, less the rent paid over 14 years. If the borrower is unable to repurchase the property, for example, due to lack of funds or in the event of death, his next of kin will be entitled to do so under the same conditions. Finally, if the conditions of the scheme are not met, KEDIPES can sell the property at its discretion after 14 years.