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Guarantee shemes

Posted by Andyp-695384 - Created: 9 years ago
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4 replies (Showing replies: 1 to 4)

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Posted by Andyp-695384 - 9 years ago

Hi Nigel. Yes we got the info from Land Registry. Thanks for the warning, I did not quite appreciate that.

Its basically all a criminal farce which is only going to get worse with the lack of Goverment interest in the problem.

You have certainly cheared me up!

Best head for the pub now.

Regards

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Posted by Nigel Howarth - 9 years ago

I'm sorry to hear that Andy,

Did you get the information about the developer's mortgage from the Land Registry? If you did, the amount shown for the mortgage is the amount that the developer borrowed originally - it is not the current balance of the loan.

The bank from whom he borrowed the money will know the current balance. But whether they will let you know the amount could prove difficult as the bank will probably tell you that the information is confidential.

But if you know for a fact that the developer has not paid anything towards his mortgage over the last four years, the bank should have classified the loan as 'Non-Performing' and started to take action against the developer to recover the debt.

A loan is Non-Performing when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full” (IMF)

But what the banks tend to do here is to restructure loans within the 90 day period to avoid them having to be classified as Non-Performing. The Central Bank issued a circular to the commercial banks to prevent what it called the "fictitious restructuring of loans" - but this being Cyprus, the banks have probably ignored the circular!

There is much unethical lending going on by the banks in Cyprus. It would be very interesting to know how many of the properties purchased by foreigners (non-Cypriots) are encumbered by developers' mortgages and the amount of those mortgages. The question has been asked, but the authorities appear 'reluctant' to provide an answer.

Regards,

Nigel

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Posted by Andyp-695384 - 9 years ago

Thanks Nigel.

I think the severity of this problem has just hit me in the last couple of days.

Our development was sold out 4 years ago and we have recently discovered that the developer has not paid back a single euro on his loan thus potentially leaving me and my neighbours with a 65,000 euro debt each. We can't afford to pay this off and I certainly could not afford to lose any savings as well.

If as you say house sales have dropped 80% I don't suppose the Banks will be in a hurry to reposess our homes if the developer defaults so where does the money come from to keep them ticking over.

The more one thinks about this the worse it gets so I best stop and get my head back in the sand.

Regards

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Posted by Nigel Howarth - 9 years ago

Hi again Andy,

Yes, the banks have a guarantee scheme - €100,000.

But I do not know whether this is guaranteed by the Cyprus Government - maybe someone else can advise.

Cheers,