NICOSIA, Nov. 26 (Xinhua) -- Bank of Cyprus (BoC) will repossess properties if their owners do not apply for protection under "Estia" plan, a statement by the lender said on Tuesday.
"Estia" was jointly worked out by the government and commercial banks to help an estimated 10,000 owners of non-performing loans to repay their dues and safeguard their primary residence against repossession.
The government will subsidize the monthly instalment of restructured loans by one third and the banks will write off part of the non-performing loans down to the market value of the property.
However, BoC said that with just 35 days to go before the end of the time limit to apply to join "Estia", it had received only 487 applications representing a total of 120 million euros in non-performing loans, out of an estimated 2,500 eligible loan owners with a total debt of 830 million euros.
Eligible loan owners are those who own a primary house of a value not more than 350,000 euros, have a family income of between 20,000 euros for single-person families and 60,000 euros for a families with four children, and own property of a value of not more than 250,000 euros.
BoC said earlier, in announcing a 3Q net profit of 19 million euros, that its non-performing loans portfolio amounts to 4.1 billion euros, down from its 2014 peak of 14 billion euros.
Other banks also said that they received a very small number of applications. This was an unexpected development that led the government extend the time limit for applications from the middle of November to the end of 2019.
Financial and market analysts said that there are several reasons for the small number of applications.
They cited the requirement to fill a 30-page applications which requires a large number of documents to be attached, and also the fact that owners of non-performing loans are either strategic defaulters who have no intention whatsoever to repay their debt or hope for a more favorable plan.
A third category of loan owners who did not apply includes those who actually have the means to repay their loans but do not want to reveal the size of their income or property.
The government devised "Estia" plan in the hope that it would help a large number of loan-owners to keep their primary house, and also unburden the banks of an estimated 2.5 billion euros in non-performing loans.
It has called on people whose economic means are not big enough to make them eligible for the plan to apply anyway, so as to get a clear picture for the size of the problem and come up with another restructuring plan, and also to protect them against repossession as "Estia" prevents banks from foreclosing on the mortgages of applicants. (1 euro = 1.10 U.S.dollars)
