Greek Banks Find Mortgage Ban Exploiters

The Bank of Greece says loans in default are soaring
The Bank of Greece says loans in default are soaring

About 30,000 homeowners, or 15 percent of the 200,000 protected under a moratorium on foreclosures during a crushing economic crisis, are taking advantage of the law not to pay their mortgages even though they can, a survey of loans by Greek banks has reportedly shown.

The information was released just a day before the Parliament is set to take up whether to lift the ban on Dec. 31 as insisted upon by the country’s international lenders and as the government is scrambling to find a way to do that while protecting those who legitimately can’t pay because of big pay cuts, tax hikes and slashed pensions put upon them.

Prime Minister Antonis Samaras and his Finance Minister Yannis Stournaras said banks – which already been recapitalized with 50 billion euros ($68.5 billion) in bailout funds from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) – need to seize homes for non-payment to help the banks further balance their sheets.

Samaras’ coalition partner, PASOK Socialist leader Evangelos Venizelos, who is his Deputy Premier/Foreign Minister, served in the previous PASOK government that initiated the ban as the administration first sought rescue aid. Earlier this year he backed lifting the ban saying only a small number of people were exploiting it but with a public outcry against it now says he won’t go along with it unless protection is offered for those who can’t pay.

If only 15 percent of homeowners are targeted, and the ban is continued, the government didn’t say how that will help the banks sufficiently.

According to bank estimates reported in Kathimerini for mortgages more than 90 days in arrears, most of the 15,000 who aren’t paying but can have mortgages of up to 500,000 euros ($685,000) and live in luxury homes but have stopped paying what the owe because the banks can’t touch them for now.

The ban has its loopholes too though. Greek courts have reportedly rejected about 8,000 claims for protection under the so-called Katseli Law, out of a total of 80,000 after judges found that those applicants had tried to hide part of their assets.

According to data from the Bank of Greece, non-performing loans in the country increased sevenfold between the start of 2008 and the end of 2012 and have reached almost 42 percent, including credit cards, loans and mortgages.

Lifting the moratorium has been an obstacle in ongoing negotiations between the government and the Troika, one of whose envoys reportedly told the government to start preparing ways to house the new wave of homeless if it is.