Reports: European creditors express 3 main objections to draft plan for protection of primary residences

Wednesday, 20 February 2019 12:17
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By E. Sakellari

Greece's European creditors appear to have aired three major objections to a recently presented plan - agreed to between the Tsipras government and the country's four systemic banks - to replace the current legal framework for protection of primary residences from creditors.

According to reports, objections in the Eurozone and in Brussels over the plan will generate another round of deliberations between Athens, banks and European creditors.

Among others, European creditors have pointed out that only in Greece, among EU countries, is the burden for protection of distressed borrowers placed on banks, instead of the state.

Specifically for Greece, Brussels has pointed out that most of the burden emanating from the current legal protection of primary residences has been shifted to the country's thrice recapitalized systemic banks.

Sources said European creditors, during the first review of the pending legal framework, also want a distressed borrower's total assets to be calculated, and not just annual income and deposits. The reasoning is that a borrower could liquidate another property to service a mortgage and to cover arrears.
Another objection raised involves the lack of a specific length of protection to be extended to eligible borrowers, as well as no process for a re-examination of a borrower's financial condition in subsequent years. The counter-argument by Brussels is that a framework of protection for primary residences cannot be extended indefinitely.
Finally, another parameter that has emerged on the negotiation table is the question of when the new framework will commence. A current Internet platform where applicants can submit documentation and information in order to seek legal protection may not operate at the end of the month, when the current framework expires.  

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