March 27, 2019 / 1:50 PM / in a month

Greece submits foreclosure protection bill, differences with lenders remain

ATHENS (Reuters) - Greece has submitted a draft bill to parliament to protect borrowers from primary home foreclosures to expedite a clean up of bank balance sheets despite differences with its official lenders on the new framework.

A wrangle over rules governing loans collateralized by primary residences delayed the release of about 1 billion euros from Greece’s lenders, including its euro zone partners and the European Central Bank, earlier this month.

The official lenders, who are still monitoring Greece’s progress after it emerged from an international bailout seven months ago, want stricter terms than those proposed by Athens.

A parliamentary committee started debating the draft law on Wednesday and parliament is expected to vote on it this week, government spokesman Dimitris Tzanakopoulos said. He said Athens was still in talks with lenders and there were some sticking points that had to be resolved.

The new law, which authorities hope can be approved this week, replaces a law buffering homeowners from foreclosures. The law was in force from 2010 and expired last month.

Some 44.3 percent of mortgage loans are non-performing in the country, weighing on bank balance sheets.

Greece’s creditors, which extended loans worth more than 280 billion euros in three bailouts from 2010 to 2015, had long argued that the provisions of that household protection law were too generous and encouraged strategic defaulters.

According to the draft law, to be eligible for legal protection, borrowers must meet a maximum income criteria; 12,500 euros for single borrowers and 21,000 for a couple with no children. The cap goes up by 5,000 for each dependent family member and hits an upper limit of 36,000 euros.

The new scheme also sets a ceiling on the commercial value of primary residences at 175,000 euros for business loans that have pledged property as collateral and at 250,000 euros for other plain vanilla mortgages.

Based on the bill, to qualify for protection borrowers must not possess other real estate and vehicles whose value exceeds 80,000 euros and also not own bank deposits, bonds, shares or mutual funds and precious metals valued above 15,000 euros.

The bill also stipulates that the outstanding loan balance, including past due interest, must not exceed 130,000 euros.

To conclude its second-post bailout review and qualify for the cash, Athens needs to get the green light from official lenders before the new framework passes into law.

A meeting of euro zone finance ministers is expected to discuss the issue and Greece’s overall progress on April 5.

Reporting by Renee Maltezou and George Georgiopoulos; Additional reporting by Francesco Guarascio in Brussels; editing by David Evans

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