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Published on 10th June 2015

Georgos Mouskides

Following the announcement of the government plan to protect the primary residence and small business accommodation by the Council of Ministers on June 3, to be monitored by KOAΓ (Cyprus Land Development Organization), we are witnessing the completion of the legal framework regarding foreclosures and insolvency.

It is now the time for tough decisions by people with Non-performing Loans (NPLs).

Why do we say this? Because all those affected must study all the relevant legislation and decide on a course of action.



What are their options?

For starters they must attempt to reach a mutually acceptable solution with their lenders for a loan restructuring. If this is not possible they must ask the Financial Ombudsman to appoint a mediator in an effort to help the two parties reach an agreement and restructure the loan.

If the mediation procedure fails then the option would be the appointment of an insolvency consultant. The consultant will try to establish whether the debtor fulfills the criteria for protection according to any of the schemes included in the relevant laws.

The consultant will also examine whether the debtor can benefit from the primary residence protection scheme. It is clear that a great number of debtors do not satisfy the criteria of either the insolvency or the mediation scenario.


The only solution for people that do not meet the criteria is to try and secure a good loan restructuring deal with their banks. Banks will most certainly go ahead with a foreclosure procedure on the mortgaged property, if such a deal is not possible.

Of course it is now clear that the foreclosure/auction procedure will be lengthy. If debtors exhaust all deadlines as set n the legislation we hardly expect any foreclosure to materialise in less than 5 years.

Are NPLs, eligible for protection by these rescue schemes, better off with these schemes or with a good restructuring arrangement? Probably they will be in a better position if they agree a loan restructuring with their lenders. Securing a sensible restructuring will ensure a better bank-client relationship, interest rates might drop, lower installments and what is most important is that trips to the courts will not be required and legal fees and other expenses will be eliminated.

Concluding, we would like to acknowledge that each case is unique and requires a careful study of its particularities. In any case, this is actually the time for a thorough study of the facts; it is time for using the proper independent advisors, so that, non performing borrowers can take the best decisions.


Written by:  George Mouskides

Chairman, Cyprus Association of Property Owners (ΚΣΙΑ)

Director, FOX Smart Estate Agency


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