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Govt sacrifices even more homeowners to reach deal with creditors

A greater number of homeowners who can’t pay off their mortgages risk losing their homes

Greece’s government took another baby step away from home owners in danger of losing their primary residence in the hope of reaching a compromise deal with creditors from the European Commission, European Central Bank, European Stability Mechanism and International Monetary Fund. In an effort to clinch a deal regarding non-performing loans so that bank capital is not endangered it was agreed that protection for primary residences of those who owe money to the state would  drop to objective values of up to 180,000 euros (+50,000 euros for couples and +25,000 euros for every child for up to three children). The limits to family income will be between 28,000 to 30,000 euros. The size of debt will also enter the equation for debts up to 200,000 euros.

At the moment, mortgage holders have the option of applying for foreclosure protection if the value of their home is 300,000 euros, but the new rules will mean that only 55% of homeowners will be protected and thousands of Greeks risk losing their homes.

Despite this, Greece’s creditors are still not satisfied. They want home values of up to 120,000 euros to receive protection for total family incomes from 21,000 to 22,000 euros. It should be noted that the Quartet has not budged on its position on the matter from previous negotiation.

Another thorny issue concerns the giving of “red” loans to hedge funds. Greece’s creditors see the moving of loans to distressed funds to be a positive way for banks to get rid off problematic loans, while also finding a solution for outstanding debt.