Minister says new foreclosure rules will protect nine out of 10 owners

A new framework that aims to prevent nine out of 10 homeowners from losing their properties if they do not keep up mortgage repayments was unveiled on Wednesday by Development Minister Costis Hatzidakis, who is also hoping that he has done enough to win the support of coalition MPs when the legislation is voted on later this week.

The current moratorium on foreclosures was due to expire at the end of the year. The troika had asked for at least a partial lifting next year but was not able to agree on a formula with the Greek government before officials left Athens this week.

As a result, Greece has decided to legislate without its lenders’ approval, creating new restrictions on foreclosures that are not as strict as the existing ban but which should protect the vast majority of homeowners.

“We are trying to protect low- and middle- income groups by producing a socially just solution that will not protect the wealthy, big incomes or fleecers,” said Hatzidakis.

The criteria announced by Hatzidakis mean that homes with a taxable value of less than 200,000 euros will still be protected if owners do not keep up mortgage repayments but only as long as they fulfill certain other criteria as well.

Foreclosures will not be allowed if: The taxable value of the property is under 200,000 euros; gross household income (not including social security contributions, income tax and solidarity tax) is no more than 35,000 euros; and the owner’s total assets are under 270,000 euros.

The criteria will be relaxed a little for families with three or more children.

The ministry also proposes that those with a household income of less than 15,000 euros per year should pay a monthly mortgage payment of 10 percent of their net monthly income.

Those earning between 15,000 and 35,000 euros per year should pay monthly mortgage payments that amount to 10 percent of their first 15,000 euros of income and 20 percent of anything they earn above that.

The unemployed will be allowed to forgo monthly payments until they have an income.

The new framework was unveiled after long discussions within the government. While it appears that fears within PASOK have been largely allayed, there are still some New Democracy MPs who are skeptical about the new plans and want the existing ban to be extended. The three lawmakers who have publicly voiced their concerns are Nikitas Kaklamanis, Iordanis Tzamtzis and Sofia Voultepsi. The latter said that this was a purely political, rather than technical, matter and that the government would suffer a backlash if people started to lose their homes.

Hatzidakis is due to meet again with conservative lawmakers on Thursday ahead of a vote on the new legislation in Parliament on Saturday.

Before that, there is the vote on the new property tax on Friday, with the government sweating over whether two MPs, Vyron Polydoras and Nikos Sifounakis, will back the legislation after expressing doubts.