Decision time comes for bank debtors

Relations between banks and their borrowers have reached boiling point, with the mailing of the third – and most crucial – notice asking debtors to come to bank branches and settle their debts set to take place in the next few days.

The response will definitively determine which borrowers will cooperate and which will be the first to have their property assets confiscated by the banks – even if that concerns main residences.

So far the response rate to the second notice from the banks has been worryingly low, ranging from 15 to 20 percent depending on the bank. That includes small and medium-sized enterprises, which are generally more willing to enter debt payment schemes. The rate among mortgage borrowers drops to 10-15 percent, as they appear more reluctant to cooperate with banks to find a solution. Many refuse to collect the notices mailed to them by the banks, while even more have moved and not informed the banks of their new addresses.

Banks make no secret of their concern regarding the latter. Worse, households are set to face an uphill challenge meeting their tax obligations in the coming months, especially as regards income tax and the Single Property Tax, or ENFIA, as it is better known.

Bank officials attribute borrowers’ reluctance to settle their debts to the confusion generated over the last few months as to the extent of the state protection that borrowers enjoy, following statements by government officials about 75 percent of main residences being protected.

The same officials explain that this applies only to those who have applied for protection under the provisions of the so-called Katseli Law, and in no way concerns all borrowers, even if their main residence is worth less than 140,000 euros.

Although the decision as to which houses will go under the hammer first will be made according to criteria such as the debtors’ assets, selecting the so-called strategic defaulters first, the process will soon concern many other borrowers too.