Greece is looking to introduce permanent support to vulnerable homeowners with a mortgage that will act as a pillow to pressures from rising home auctions, as outlined in a report from the European Commission.
The European Commission's Enhanced Surveillance Report on Greece outlines the country's plans to support those who have not sought the protection of their primary residence under the household insolvency (Katseli) law but renegotiated the terms of their loan in a bid to avoid losing their home.
As pointed out by the report, Greece's new social security law that has come into effect will result in a budgetary cost of less than 0.5 percent of gross domestic product, that will be more than covered by savings created by the dropping of the 13th pension (an amount of some 900 million euros)
"Part of the 13th pension could be used for social welfare policies such as an increase in the guaranteed minimum income scheme or a housing scheme for vulnerable homeowners with a mortgage," the report said.
The report went on to add the housing support that is already being paid is a type of benefit for vulnerable households in default, but there is no respective help those in a weak position meeting loan commitments. The assistance is offered to those who have a bad loan and have sought protection via the Katseli law that expires in April.
The European Commission also highlighted that Greece has committed to freeing up home foreclosures as of May by banks, in line with new legislation to be adopted by the country.
The introduction of Greece's new insolvency law is tied to a 640 million euro payment from profits booked on Greek government bonds by European central banks. The commission said that no obstacles should be placed on the execution of forced home sales and that any protection offered to vulnerable groups should be in the form of social policy.
This means that those at risk of losing their homes as of May will have one more chance to save the property. They will be able to seek entry into a loan payment assistance scheme after renegotiating the terms of their debt with the bank or fund.
How many people will be exposed to the risk of losing their homes after the current residence protection law expires at the end of April? Lots, most likely. The European Commission said there are few signs that the residence protection law is being used by homeowners to start paying off home loans.
Data shows that 44,924 initial applications were made by homeowners on a government platform to help mortgage holders renegotiate loan terms and seek financial assistance. However, only 2,218 of them were completed in the online procedure. Banks have put together 836 offers of new repayment terms, of which 380 were accepted by loan holders, with 240 of them also qualifying for financial assistance.
Nontas Haldoupis
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