Greece’s international lenders are pressuring the coalition government led by Prime Minister and New Democracy Conservative leader Antonis Samaras again to lift a ban prohibiting banks from confiscating homes worth more than 200,000 euros ($260,000) of Greeks who can’t afford to pay their mortgages because of daunting austerity measures.
Some banks have refused to restructure mortgages despite big pay cuts, tax hikes and slashed pensions imposed by the government, that also includes the PASOK Socialists, on the orders of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) whose allegiance is to big banks and investors.
The idea of lifting the ban, which is set to expire at the end of the year, has riled even some government Members of Parliament who are told how to vote by Samaras and PASOK leader Evangelos Venizelos, and has set off ire among other parties, particularly the major opposition Coalition of the Radical Left (SYRIZA).
With banks suffering a more than 27 percent default rate on loans because austerity measures have left many Greeks unable to pay, they are also demanding they be allowed to repossess homes to help them recapitalize their coffers. Ironically, New Democracy and PASOK together owe banks more than 250 million euros ($332.5 million) but aren’t being pressured to pay at the same time they are in charge of giving the banks 50 billion euros ($66.5 billion) in an injection of funds, some 200 times what they owe.
The government is considering a partial lift on the ban, said Deputy Minister of Growth Thanasis Skordas, who suggested that allowing the auctioning of primary residences based on social criteria, in order to protect vulnerable groups, would be allowed. It was not reported whether any politicians are in danger of losing their homes as they have largely escaped the effects of austerity.
It was estimated that a revision on the bank would result in my residences with a high objective value to be take by bank but result in a drop in value between 12% and 21%. Home values and prices have plummeted precipitously over the last three years.
Many MPs from both parties supporting the government reacted against this proposal and spoke of extending the ban until the end of 2014, in order to protect borrowers.
In their reports on the Greek economy, both the EU and IMF have requested that aggressive action be taken to deal with bad loans but didn’t mention that PASOK and New Democracy would have to pay what they owe. The goal is to set up a plan that will protect households that have been consistent in their payments, but face problems due to financial crisis, while discouraging borrowers who chose not to pay even if they couldn’t. There were no details on how the difference could be determined.
By fall, the Greek authorities must have a report on the policies of each credit institution for dealing with bad loans. These reports will be evaluated by the Troika, the Bank of Greece and the bank themselves, so that by October they can make specific proposals to improve practices.
Initial reports about a partial lifting of the ban set off a firestorm of criticism from consumer organizations who demanded MP’s reject it. The General Consumer Federation ΙΝΚΑ has already addressed the Parliamentary Standing Committee on Production and Trade, arguing that the primary residence is often the sole residence of borrowers and that thousands of people could be thrown onto the streets.
The federation also claims that the Ministry of Growth has not calculated the social repercussions of allowing the auctioning of primary residences and the social explosion that such a legislative initiative might cause. The organization has also requested that the Ministry estimate the increase in the number of the homeless, as a result of such an act.
Consumer union EKPOIZO also demanded that the ban be extended for a further three years and requested the development of a network to deal with bad loans by giving impartial financial advice and ensuring a decent living of standard, according to European standards.
The government has not acted on a bill it promised to pay giving debt relief to households who could prove they could not afford to pay loans, credit cards and mortgages because of loss of income and tax burden demanded by the state.
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