It is legally possible to temporarily deprive a debtor of the use of a mortgaged property or motor vehicle until he makes good on his debt. Such alternative measures may be acceptable to the Troika, because the intent of any foreclosure legislation is not to dispossess Cypriots of their homes or cars, but rather to provide a guaranteed revenue stream to the banks.
My late mother worked as a debt-collector for various legal companies. She often submitted applications to the court on behalf of her clients for “sequestration” of property. That meant that a debtor was barred from the use of his home or car until his debt was settled. The houses had their locks changed by the sheriffs of the court and the cars were stored in a large parking bay owned by the banks.
The bank or creditor was not allowed to repossess or auction the asset unless the debtor failed to abide by payment terms ordered by the court. Usually the debtor agreed to the court imposing a “garnishee order” whereby a certain sum was deducted from his salary (or unemployment benefit) each month. Once the debt had been honoured to the satisfaction of the creditor, the debtor was allowed to reclaim possession of the asset.
The lowest divisions of the court had jurisdiction in such matters. More importantly, the lawyers who had not yet been admitted to the bar, who were doing their “articles” with law firms, were allowed to represent either the plaintiff or defendant in court.
This ensured that the sequestration process moved through the courts very quickly, as newly qualified law graduates were keen to build a good reputation.
The steps I have listed may be defined by another legal term, but this is the procedure that I recall from the 1960s. I suggest that it would be more reasonable to add this half-way stage to the process of repossessing primary residences, rather than for banks to move directly from default to foreclosure. It may well yield the desired results.
Additionally, such measures would avoid the need for the extra-judicial fast-track processes requested by the Troika, which could be challenged in the Constitutional Court. The banks might also be challenged in court when they sell the NPLs to vulture funds, having failed to exhaust all other remedies.
John Morgan, Oroklini
