A deal with creditors on bank home foreclosures will protect 60 percent of debtors with non-performing bank loans, Economy minister Yorgos Stathakis and Finance Minister Eucleides Tsakolotos told a news conference this afternoon.
About 400,000 of 1.2 million home loans are not being serviced.
Tsakalotos said bank recaps, completion of the first troika evaluation, and debt relief talks are now the top government priorities as Tsakalotos said.
The ministers said that the deal sets up two categories of protection from foreclosures.
About 25 percent of borrowers, those with the fewest means, will be absolutely protected from foreclosure. It is estimated that in this category, families should not have to pay more than 10 percent of their monthly income for home loan instalments.
For poor families that cannot even manage the monthly instalment, a special state fund will cover the costs.
A second category, covering 25-60 percent of borrowers, with a maximum annual income of up to 35,000 euros, will now have the advantage of having their entire debt and the level of instalments calculated based on the current market value of the home, which can often be as much as half of the value six years ago or more.
The instalment will be about equivalent to the monthly rent value of the home.
The current market value will be established in a court with the testimony of real estate valuators.
However, if a borrowers income is not enough to cover the new, lower instalments, the bank will have the right to proceed with foreclose on a home loan, based on the ethics code of banks.
Tsakalotos depicted the deal as a victory for the government΄s negotiating strategy, as the troika initially insisted that no more than 15-20 percent of homes with outstanding bad loans be protected.
“We promised the Greek people we would negotiate with creditors and achieve objectives. That is what we did,” Tsakalotos said.
While the Katseli law that protected homes from foreclosure was positive, the ministers said, it did not offer the comprehensive arrangement provided by yesterday¨s deal, which they said will definitively resolve the management of bad home loans.
Regarding what will replace a 23 percent VAT tax, Tsakalotos said the government is considering a 30 cent per bottle tax on wines, which he said should not notably harm the wine industry, and two other revenue raising measures which Tsakalotos did not disclose. A final announcement is expected tomorrow.
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