Speaking to the state broadcaster on Thursday, the finance ministry’s permanent secretary Giorgos Panteli said they expect the European Commission’s Directorate General for Competition to give the scheme the nod by the end of June.

The scheme will cover all non-viable households who have applied for the ‘Estia’ plan but whose income is insufficient to keep up with payments.

Under the envisioned ‘mortgage to rent’ scheme, households will pay a low rent for five years, after which they would be able to buy their residence.

Under a mortgage-to-rent scheme, intended to help homeowners at risk of losing their property due to mortgage arrears, a person voluntarily surrenders ownership of their home to their lender. An entity buys the home from the lender and becomes the landlord. The borrower no longer owns their home, but will continue living in as a tenant.

According to Panteli, the mortgages of non-viable households approved for ‘mortgage to rent’ would be transferred from commercial banks to Kedipes – the successor entity set up to manage the non-performing loans, real estate and other assets of the failed cooperative bank.

Kedipes has applied to the European Commission seeking approval to be transformed into a National Asset Management Company – allowing it to manage the ‘mortgage to rent’ scheme.

The European Commission has made it clear to Kedipes that it will approve its request provided that the state company managing the assets of the now-defunct cooperative will not purchase delinquent loan portfolios.

Kedipes would be authorized to buy from commercial banks only immovable property considered as secure collateral.

In relation to this, said Panteli, banks have been advised not to repossess properties of distressed borrowers who have applied for the ‘Estia’ scheme.

It’s understood that ‘mortgage to rent’ will concern primary residences and business premises of up to €350,000.

The finance ministry is currently formulating the eligibility criteria. The ministry expects the scheme to have an impact on government finances, but the extent will depend on the amount that Kedipes pays to acquire the mortgage portfolio and the rent that it will pay out to debtors.

For vulnerable borrowers, the rent will be paid by the government.

Source: Cyprus Mail