By Stamatis Zisimos
A temporary exclusion of non-performing loans linked to mortgages or liens for primary residences from being sold to distress funds is reportedly the result of months of negotiations between the Greek government and creditors’ representatives.
If the development pans out, at least one of a handful of obstacles in achieving a first review of the now delayed Greek program (third bailout) will have been overcome.
The compromise, nevertheless, will entail several conditions for the affected NPLs and will reportedly extend until 2018.
Additionally, performing loans will be included in NPL portfolios, a demand by creditors to make such products more attractive to foreign investors.
Relevant Economy Minister Giorgos Stathakis said the issue has been concluded, in statements on Tuesday evening, saying his government’s goal to “protect primary residences” has been achieved. He added that the agreement covers 93 percent of borrowers with NPLs.
Conversely, the government’s attempt to keep consumer, business and corporate NPLs from distress funds appears to have been abandoned.
Some of the other conditions for the temporary exclusion of mortgages from repurchase by distress funds include an objective tax criteria value on the property of no more than 140,000 euros (increased incrementally based on the number of dependent listed by the borrower); a maximum annual income for a married couple with two children of 20,640 euros, and a condition of the borrowing being “cooperative” during the previous period.
A recent law determined “cooperative” as having made efforts in the previous period to find compromises on managing an outstanding loan balance with the bank or credit institution.
