Greece’s finance ministry is working on a plan to protect the primary residence of households deemed financially vulnerable, ahead of the resumption of auctions in early June.
The plan stipulates that the state will subsidize mortgage tranches in accordance with protection principles that will apply once the state-owned property acquisition agency is operational. The goal is to protect the primary residence of borrowers from coercive actions by banks or service providers.
The acquisition of property by the entity is provided for by the new bankruptcy law on the provision of a second chance. It will acquire property from vulnerable households and allow borrowers to stay in them by paying rent that will be subsidized by the state. This subsidy will range from 70 to 120 euros per month.
However, the creation of this legal entity is expected to be delayed as it is estimated to have been founded in early 2022. This will create a gap in the primary protection of residence, especially for vulnerable households with low annual income, with a limit of 7,000 euros to 21,000 euros per year, depending on the number of dependent family members.
The need for protection is becoming acute for this category of borrowers on the eve of the complete liberalization of auctions for all categories of debtors, which began in early May. Basic residency protection is valid until May 31 and only if debtors meet certain income and property criteria and are proven to be affected by the pandemic. This is why the ministry is negotiating with banks to protect their vulnerable clients through direct subsidies to these households, regardless of the launch of the new structure.
To preserve the culture of payments, the government’s proposal stipulates that the debtor should cover part of the monthly tranche, for example, a third of it.
Meanwhile, on Wednesday, the Greek Development Bank will activate the Entrepreneurship Fund II, through which commercial banks will provide investment loans to very small, small and medium-sized enterprises. Loans will range from 25,000 to 1.5 million euros and will be issued by ten banks.