The second marathon negotiation between Greece and the quartet of international creditors ended at 5 am on Monday with the issues of bad loans and primary residence foreclosures still unresolved.
According to sources close to the talks, the Greek team is trying to save about 60 percent of debtors who fail to make their mortgage payments, meaning middle class families and not only poorer households. At the same time it is agreed that measures should be taken for those who can afford to repay their home loans but avoid it using the economic crisis as an excuse.
A new meeting between the two sides is scheduled at 2 pm on Monday to continue deliberations on management of non performing loans and the new legal framework for home auctions. Athens and lenders must agree which bad loans will be sold to distress funds. That includes mortgages and business loans.
The Greek side proposes that only business loans above 1 million euros should be sold to distress funds. On mortgages, Athens proposes that 60 percent of home loans should be protected, namely for households with income 30,000 euros or less.
Lenders propose that all business loans that distress funds consider “interesting” should be sold, regardless of amount. On mortgages, they want about 25 percent of debtors, translating to minimum wage incomes and up, to be protected from auctions.
Another issue that remains to be resolved is the management of arrears after a bad loan settlement.
These issues must be resolved by Tuesday, November 17, when the Euro Working Group will convene to decide if they approve on a staff level the disbursement of a subtranche of 2 million euros from the bailout program.