Introduction
The Ministry of Finance is preparing two bills to protect regular borrowers who are in danger of losing their primary home.
Government plan to support regular borrowers
As you know, the government has recently introduced two bills to protect regular borrowers. The first bill provides that a mortgagee cannot file a lawsuit against a borrower whose annual income does not exceed 12 times the amount of his installment. The second bill makes it clear that if there is no legal basis for collecting unpaid installments from a borrower in bad health or with insufficient funds available at all, then those installments should not be collected by any means whatsoever.
The Ministry of Finance is preparing two bills to protect regular borrowers who are in danger of losing their primary home.
The Ministry of Finance is preparing two bills to protect regular borrowers who are in danger of losing their primary home.
The first bill provides that a mortgagee cannot file a lawsuit against a borrower whose annual income does not exceed 12 times the amount of his annual installment on his loan.
The second will allow borrowers to pay off their loans early, with interest charges only being applied after they’ve paid them off completely.
What the government says
The government wants to help regular borrowers who are in danger of losing their primary home. It is preparing two bills that aim to protect such borrowers from being sued by mortgagees who have filed lawsuits against them. One bill provides that a mortgagee cannot file a lawsuit against a borrower whose annual income does not exceed 12 times the amount of his installment, while the other prohibits any additional claim against him by way of garnishment or attachment.
The first bill has been approved by both Houses of Parliament and awaits President’s signature before it becomes law. The second one will be submitted for consideration within six months after its approval by both Houses; if passed into law, it would come into force after three months
“No one will lose his home. We will not tolerate a third round of foreclosures,” said Deputy Minister of Finance George Zavvos, outlining the government’s plans to make a filing impossible for anyone who does not have financial resources to pay his debt for five years.
“No one will lose his home. We will not tolerate a third round of foreclosures,” said Deputy Minister of Finance George Zavvos, outlining the government’s plans to make a filing impossible for anyone who does not have financial resources to pay his debt for five years.
The first bill that is being prepared by the ministry provides that a mortgagee cannot file a lawsuit against a borrower whose annual income does not exceed NIS 50,000 (about $13,000). The second bill will provide protection from foreclosure for homeowners who have been living in their homes for 5 years or more; however, it does not give them any cash back on what they owe if they decide not to move out after this time period ends or if their house value falls below 50% of its original value.
The first bill that is being prepared by the ministry provides that a mortgagee cannot file a lawsuit against a borrower whose annual income does not exceed 12 times the amount of the annual installment on his loan.
The first bill that is being prepared by the ministry provides that a mortgagee cannot file a lawsuit against a borrower whose annual income does not exceed 12 times the amount of the annual installment on his loan.
The second bill will help protect regular borrowers who are in danger of losing their primary home from foreclosure proceedings initiated by financial institutions such as banks and mortgage companies.
The second expands the criteria for submitting a request for protection under the new foreclosure law so that those who meet certain conditions, beyond those covered by this law, can benefit from it. Specifically, single beneficiaries will have an additional five years to repay their loan if they receive in addition to their own income the income of one more person who can submit an application and has an income of up to 8,000 euros per year, while two persons will be able to submit an application when they together have an annual income that does not exceed 16,000 euros per year.
The second expands the criteria for submitting a request for protection under the new foreclosure law so that those who meet certain conditions, beyond those covered by this law, can benefit from it. Specifically, single beneficiaries will have an additional five years to repay their loan if they receive in addition to their own income the income of one more person who can submit an application and has an income of up to 8,000 euros per year, while two persons will be able to submit an application when they together have an annual income that does not exceed 16,000 euros per year.
The government also plans on extending this period to ten years after completing four years of studies at university or another level or having been employed continuously since leaving secondary school (up until then).
Conclusion
These bills will help regular borrowers who are at risk of losing their homes. They will protect them from the financial pressure that can result from court proceedings, which are expensive and time-consuming. The government is proposing legislation that will allow borrowers to remain in their homes for an extended period of time if they do not have any income or if they face a difficult financial situation.
