On Monday, December 4, the "Mortgage for Rent" program was launched in Cyprus.
According to the Ministry of Finance, for the first day in the service center, established by the Cyprus Property Management Company (KEDIPES), received more than a hundred calls from potential beneficiaries who expressed a desire to participate in the scheme. If you look at the cities of Cyprus, the greatest interest in the program are the residents of Nicosia. They are followed by residents of Limassol, Larnaca, Paphos and the free neighborhoods of Famagusta.
KEDIPES Chief Executive, Lambros Papadopoulos, expressed satisfaction with the progress of the large-scale scheme. He also urged troubled lenders, whose loans meet the criteria of the program, to take very seriously the opportunity given to them to settle their debt obligations.
As a reminder, the Mortgage for Rent scheme covers overdue loans secured by a principal dwelling of up to 250 thousand euros.
Beneficiaries are people belonging to low-income groups and pensioners, whether or not they have applied to join the ESTIA and Oikia schemes.
The program is also open to borrowers who have defaulted on their mortgage but their application to join the ESTIA and Oikia schemes was rejected because they were classified as non-viable due to low income.
A separate company, KEDIPES EED Ltd, was set up to administer the new scheme and will 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 possession of KEDIPES.
Call centers and service points have also been set up in 5 towns in Cyprus, staffed by qualified personnel who will be able to answer any questions the public and those interested in participating in the scheme may have.
The primary function of KEDIPES is to purchase bad debts 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 get rid of toxic debt totaling €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 for Rent program.
As envisioned, KEDIPES will purchase mortgage homes from debtors. Problem borrowers will then have the opportunity to rent their real estate from the "bad bank" for 14 years. During this period, they will be charged rents at 65% of market averages. By the way, the rent for each property will be set individually.
At the end of the term, they will be able to get the asset back if they pay the arrears. The current property price for borrowers in arrears will be equal to the price at which KEDIPES purchased the property, less the rent paid for 14 years. In the event that the debtor is unable to buy the property back, for example for lack of funds or in the event of death, his next of kin will be entitled to do so on the same terms. Finally, if the conditions of the scheme are not met, after 14 years KEDIPES will be able to sell the property at its discretion.