Chances of timely deal for protection of borrowers’ homes are decreasing

The government will on Wednesday attempt via another conference call to find common ground with the country’s creditors on the new protection framework for borrowers’ primary residences after Tuesday’s fruitless effort, with just five days left until the March 25 Euro Working Group.

Repeated previous attempts have failed, and after Tuesday’s conference call government sources said that the differences between the two sides remain on most major aspects of the plan that will replace the obsolete provisions of the Katseli law.

The creditors are particularly opposed to the so-called perimeter of the new framework, arguing that it is too broad and is not limited to borrowers who are truly unable to repay their loans. This, the creditors add, damages the already weak payment culture in Greece and does not rule out strategic defaulters.

There are also serious objections to the inclusion in the new system of corporate loans secured against the borrowers’ main residence, and to the high – as the creditors see it – protection limit the government is proposing for the primary residence: This comes to a maximum value of 250,000 euros, with the creditors insisting on this figure being lowered to 150,000, if not 100,000.

The creditors also consider the limit for any secondary properties owned by a borrower seeking protection at 260,000 euros as extremely high, proposing instead a limit of just 25,000 euros, while demanding the limit for bank deposits be reduced from 65,000 euros to just 5,000.

Creditor pressure has put Athens in a difficult position, as it is being asked to give ground on a politically sensitive matter before a general election, and has been told that otherwise next month’s Eurogroup will not approve the release of the 1-billion-euro tranche.

A government source said on Tuesday that efforts are being made to reach a deal by Monday, but did not rule out the possibility of the government tabling a bill without having reached an agreement with its creditors. In that case the 1-billion-euro disbursement will be postponed again and the early repayment of the International Monetary Fund loans will not be approved.