Bank Foreclosures in Greece Delayed
SYRIZA won two national elections due to voter appreciation of its strong, anti-memorandum rhetoric. Support from ANEL and slogans such as “Seisachtheia” and “Termination of the MOU” summarized the essence of Prime Minister Alexis Tsipras campaign and convinced impoverished citizens to vote for him. However, the slogan that resonated in voters’ hearts and caused the biggest damage to the opposition was “No homes for banks.”
Homeowners who couldn’t keep up with mortgage loan payments suffered the most in the Greek crisis that began in 2010. Since no protective measures for debtors were in effect at that time, banks terminated the loan agreements of those who were unable to pay them off and foreclosed their real properties. As the crisis deepened and the number of foreclosures increased, the State enacted a series of laws that prevented banks and individual creditors from taking legal action against weak debtors, thereby protecting families’ principal and only residences from foreclosure. Since home ownership is the cornerstone of the Greek dream, the political cost would have been unbearable for any government.
Under the pressure of the European Troika, Law No. 4224/2013 was the last that excluded the only and principal homes from foreclosure until 31 December 2014. Beginning in 2015, family homes could be protected only under personal bankruptcy law which requires debtors to fulfill strict requirements. For instance, the debtor must pay off--with interest to creditors--an amount that equals the house’s retail price within a timeframe of twenty years. However, even under the personal bankruptcy law, valuable assets of the debtor’s immovable or movable property other than his only or principal residence are sold at auction, often for reduced prices.
Since 2015, only a small number of real property auctions have occurred. During the first half of 2015, the newly established Greek government negotiated with its European creditors (a.k.a. “the Institutions”) the terms and conditions of a new borrowing agreement. Failure of negotiations led to the referendum of 28 June 2015, followed by the signing of a third new memorandum by the Greek government. With stricter terms than the previous agreements, it was passed by the Greek parliament and published in the Government Gazette on 14 August 2015. Thus, 2015 passed with few bankruptcy auctions of real property. Moreover, from January to July of 2016, lawyers, under whose orders the foreclosure procedure is conducted, went on strike against the amendments to the Civil Procedure Code and the reform of the Public Insurance System. In addition, Greek law forbids auctions in the month of August.
Since September, 2016, organized groups of debtors have protested notaries, under whose supervision the auctions are conducted, resulting in cancellation of most auctions of immovable properties. This protest movement has grown in strength and size, such that the government and the police seem unable (or unwilling?) to react. Now the country’s creditors demand that auctions be conducted through an online platform, to avoid protests by organized groups of citizens at county court buildings.
Without a doubt, 2017 will be the year of truth for the parties of SYRIZA and ANEL, which support the current government, at least regarding the foreclosures and auctions of citizens’ real properties. Time will show whether the government will press ahead with all necessary reforms demanded by the Institutions or Tsipras will declare national elections early once again.
ABOUT THE AUTHOR: Athanasios Rozou
Athanasios Rozou and Associates Law Office provides businesses and individuals with high quality legal services throughout Greece.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.