Euro bank identifies risks in Greece anti-foreclosure law News
Euro bank identifies risks in Greece anti-foreclosure law

[JURIST] The European Central Bank (ECB) [official website] on Friday released an opinion [text, PDF] on Greece’s draft law prohibiting the foreclosure of primary residences. Under the draft law, banks are prohibited from auctioning primary residences valued at less than €300,000 (USD $317,580), provided that borrowers meet certain total wealth requirements. The draft law is intended to replace Greece’s recently-expired foreclosure law [PDF], which provided protections for homes valued at €200,000 (USD $211,720) or less, along with less generous total wealth requirements. The ECB expressed in its opinion that the increase in scope for eligible debtors could incentivize unscrupulous debtors to engage in strategic defaults, or simply cease paying their home loans with no repercussions to inspire payment.

The 2012 Greek bailout was one of the most dramatic events in the country’s recent history and it had a serious effect on the country’s economic stability. Last month, Greece’s Hellenic Parliament passed an anti-poverty bill [JURIST report], despite requests from international creditors to hold off on the vote until they had time to assess its budgetary impact. In February, Euro zone finance ministers agreed to extend Greece’s financial rescue [JURIST report] by four months. In May 2013 a report by UN Independent Expert on foreign debt and human rights Cephas Lumina found that the conditions of Greece’s bailout plan, put in place by its international lenders, had severely undercut the ability of Greek citizens to obtain a standard of living [JURIST report] in line with international human rights standards. In January 2013 Greece’s Hellenic Parliament approved new tax legislation [JURIST report] enabling the country to pay back its loans and continue receiving financial aid.