Nobody really vulnerable household he is not in danger of being outside his main place of residence, assures in the application n Association of Management Companies EEDADP, noting that “vulnerable borrowers can access the EGDIX electronic platform from January 2023, obtain a vulnerability certificate and take advantage of the opportunities provided by the interim program of Law 4916/2022. The temporary program provides, on the one hand, the immediate suspension of the auction, and on the other hand, the payment of a state subsidy for the payment of the loan installment, provided that borrower will join Agency for the purchase and rental of real estate. The agency’s solution ensures that vulnerable borrowers can keep their first home for 12 years through a long-term lease, while providing the opportunity redemption of property after the expiration of the above period.

Only 17% of red loan repayments came from auctions.

In connection with the recent decision of the Plenum of the Supreme Court on the issue of legalization of management companies for auctions, EEDADP characterizes as completely unreliable reports that 700,000 houses will be put up for auction. According to EEDADP, the number of properties pledged for problem loans is 600,000, of which only 50% are residential properties, and the remaining 50% belong to other categories of properties (industrial or other professional properties, warehouses, parking lots, etc.). d.). In residential real estate, the vast majority of debtors, EEDADP says in a statement, will find a compromise solution as historically 8 out of 10 loans are adjusted by consensus. Auctions are always the last resort in the collection process. They are never the tool of choice for service departments because it is a costly and time consuming process. In particular, to complete the enforcement procedure, from the moment the payment order is issued until auctionusually takes 2-3 years. Also, if we take a loan of 100,000 euros as an example, the cost of enforcement would be approximately 15,000 euros. To achieve savings in time and money, the first option and the most beneficial for both the creditor and the debtor is always a compromise debt settlement, and evidence of the priority of consensus settlements over auctions is the fact that in 2020-2022. 83% of NPL recoveries resulted from consensus resolutions, and only 17% of recoveries came from auctions.

“The commitment of the management companies to a successful consensus process,” notes EEDADP, “is confirmed by the fact that in total, by the end of 2022, they have reached bilateral loan agreements totaling more than 35 billion euros. thereby returning more than 700,000 borrowers, individuals and businesses back to a healthy economic cycle.” Over the past three years, more than 8 billion euros of loans have returned to regular repayment status and returned to banks’ balance sheets as payable, restoring access to the banking system for more than 115,000 borrowers, according to EEDADP data. The consensual agreements in most of them also include debt forgiveness and revealingly indicate that the haircut ranges from 35-40% in home loans, 50-65% in consumer loans, 55% in small business loans and large corporate loans. loans about 40%. For the first half of 2023, the credit management companies have set a goal for loan agreements and settlements to reach 3.2 billion euros, which is more than 30% more than in the same period in 2022.

What does the Supreme Court decision mean for borrowers?

EEDADP makes specific reference to the Supreme Court’s decision, rebutting the view that it freed the holding of auctions. The Supreme Court, he explains, decided a purely legal and technical question, namely, whether Law 4354/2015 management companies (servicers) have the ability to initiate legal action on claims that have been securitized and transferred to special purpose vehicles. (facilities). Thus, the legal issue that reached the Supreme Court had nothing to do with the possibility of holding auctions.

“Legalization”

The question was which person has the ability (or, in legal terminology, “legalization”) to conduct an auction when a loan is transferred to a fund under law 3156/2003 securitization. Until 2022, the courts recognized that servicers are authorized to take such action both in respect of loans sold under the new Law 4354/2015 and in respect of loans securitized under the earlier Law 3156/2003.

In 2022, contrary judgments were issued on a specific issue, and the Plenary Session of the Supreme Court resolved this dichotomy by ruling that servicers have the legal right to conduct auctions or other legal actions, as well as loans that were transferred in the context of securitization with N 3156/2003 . In practice, the decision of the Supreme Court does not change anything for borrowers in relation to planned or future auctions, except perhaps the timing of a number of them.

However, the EEDADP argues that the issue of auctions is important to the payment culture to the extent that “if there is no functioning system to enforce debt collection, no debtor will have an incentive to repay their debts. And in such a case, no financial institution could lend money to its depositors with the prospect that they will never be returned, ”he concludes.

Transfers and taxes

EEDADP characterizes as unsubstantiated the claim that by choosing to transfer loans under the 2003 law rather than the 2015 law, funds or servicers avoided €58 billion in taxes, given that securitized loans amount to about €55 billion . something like that, he notes, “is against common sense.” Both laws, he emphasizes, “provide tax relief for stamp duty and public register fees, with the same taxation of income from the management of loans.”

Payments via TIPS

Direct payments to the state in less than 10 seconds, both domestically and abroad, since yesterday are provided by the Central Bank, as an authorized bank of the state, through the modern system of the Eurosystem. TARGET Instant Settlement Infrastructure (TIPS). The instant payment service is primarily about tax liabilities to AADE and is especially important for taxpayers who want to pay off their debts without delay. The Bank of England is the first central bank in the Eurosystem to join TIPS as a beneficiary bank for domestic and international government payments. This feature allows:

• Irrevocable completion of every transaction between accounts in real time.
• Immediate notification of recovery and reimbursement in case of refusal.
• Make payments 24 hours a day, every day of the week, every day of the year.
• Immediate availability of the amount to the recipient.

The main benefits of the new service are to simplify and minimize the processing time for transactions with the government, save resources and administrative burden for participants, encourage the use of innovative and secure means of payment in everyday transactions, and provide environmentally friendly means of payment. .

Out-of-court and business arrangements

In addition to the provisions for vulnerable borrowers, which cover approximately 15,000 borrowers (many of whom have used the online platform to obtain the appropriate certification, which is the first step to benefiting from the interim program), EEDADP makes specific reference to enterprise mechanisms. The bilateral agreements, he notes, “offer a real second chance for sustainable growth with a restructuring that does not run out of profitability (EBITDA) for loan repayments, but allows it to be used as working capital. Management companies also provide consulting services for the integration of restructured companies into all available national and European subsidy and financing programs (NSRF, Recovery Fund, etc.).

At the same time, the Out-of-court Debt Settlement Mechanism is in place, which individuals and legal entities can also apply for the full settlement of their debts to the state, insurance funds and banks. Recall that the electronic platform of the extrajudicial mechanism became fully operational around January 2022, and over the past year, agreements on loans in the amount of 1 billion euros have already been reached. The rate of application submission and completion of agreements is accelerating, and the approval rate of submitted applications is currently 70% with a constant upward trend. In cases of debts up to 200,000 euros, which mainly concern individuals, the approval rate under the out-of-court mechanism exceeds 75%. The out-of-court mechanism procedure is binding on all participating creditors if a minimum majority of creditors (in particular 60%) has agreed to the arrangement.

EEDADP concludes that no enforcement procedure can be initiated unless the debtor has previously been asked to compromise its debts.