The government expects the European Commission to give the green light to roll out the mortgage-to-rent scheme soon.
Speaking on state broadcaster Thursday, Giorgos Panteli, permanent secretary of the finance ministry, said they expect the European Commission’s Directorate-General for Competition to approve the scheme by the end of June.
The scheme will cover all non-viable households that have applied for the Estia plan but whose income is insufficient to pay the payments.
Under the proposed “mortgage-to-rent” scheme, households will pay low rent for five years, after which they will be able to buy their own home.
Under a “mortgage-for-rent” scheme designed to help homeowners who are at risk of losing their property due to mortgage arrears, a person voluntarily transfers ownership of their home to their lender. An enterprise buys a house from a lender and becomes a landlord. The borrower no longer owns their home, but will continue to live in it as a tenant.
Mortgages from non-viable households approved for “rental mortgages” will be transferred from commercial banks to Kedips, a successor entity set up to manage the failed loans, real estate and other assets of the failed cooperative bank, Panteli said.
Kedipes has applied to the European Commission to be allowed to transform into a national asset management company, allowing it to operate a mortgage-to-rent scheme. The European Commission has signaled to Kedipes that it will grant his request on the condition that the state-owned company that manages the assets of the now defunct cooperative does not buy overdue loan portfolios.
Kedips will be allowed to buy from commercial banks only real estate considered as collateral.
In this regard, Panteli said, banks were advised not to return the property of troubled borrowers who applied for participation in the Estia scheme.
It is envisaged that the “mortgage for rent” will cover the main residential and commercial premises in the amount of up to 350,000 euros.
The Ministry of Finance is currently formulating eligibility criteria. The ministry expects the scheme to impact public finances, but the extent will depend on the amount Kedipes pays to acquire the mortgage portfolio and the rent it pays debtors.
For vulnerable borrowers, the rent will be paid by the state.