Cyprus Asset Management Company Ltd (KEDIPES) is delivering a last-resort solution to defaulted borrowers in an effort to rescue thousands of borrowers in distress. KEDIPES has estimated that this plan will benefit borrowers of 800 residences. The plan will be managed by a subsidiary company established by KEPIDES. With this scheme, the government aims to protect defaulted borrowers from losing their homes.
Defaulted borrowers can apply for the plan if they have been rejected from a previous plan called “ESTIA”. In addition, the value of the borrower’s residence must not exceed €250,000. KEDIPES will pay the holders of the mortgage 60% of the market value of the property as collateral for the non-performing loan. The mortgage between the original lender and the borrower will cease to exist and the property will be acquired by KEDIPES. Under the new scheme, the borrowers will become tenants and continue to reside in the property.
The steps to apply are first the submission of an application by the borrowers that would be examined by the bank and credit bureaus. Apart from an ID number, social security number, and address, the borrower should provide necessary documents accompanying the application such as utility bills and the property deed. After the documents are checked by the creditors, KEDIPES will examine the eligibility of the borrower based on the aforementioned criteria and accept or reject the application.
The benefits for the defaulted borrowers vary. First, although the property owner is now KEDIPES, the borrowers can continue residing in the property. Second, the Republic of Cyprus undertakes the payment obligations of the rent due to KEDIPES. The outstanding amount is to be paid within a period of 15 years. Lastly, the tenants will have the opportunity to repurchase the property from KEDIPES after 5 years of acquisition at an attractive price.
At Christy’s, we represent clients ranging from international property companies to homeowners. We act for property funds, residential and commercial developers, private investors, and lending institutions. We stay on top of legal developments in the real estate world such as the new mortgage-to-rent scheme to efficiently advise our clients on their next moves. Regarding any queries contact us for a high standard of service with in-depth expertise.