The interest of borrowers who have a loan in arrears is increasing, in order to immediately proceed with its adjustment, taking advantage of some of the available tools that exist.
This trend is also reinforced by decisions of the European Central Bank on interest rate increaseswhich undoubtedly causes the debtors to think about the next day and about the final amount that the interest rates will be.
In the meantime, they seem to be changing gears banks and servicerswho, wanting to take advantage of the positive momentum that exists, more easily accept borrowers’ requests for joining either the out-of-court settlement, either for bilateral agreements.
This can be seen from the available data which shows a large increase in the arrangements ranging from 700 to 800 million on a monthly basis. Of these approximately 250 million are settled out of court and another 450 to 550 through bilateral agreements between banks – servicers and the debtor.
Applications and arrangements are increasing
As recently announced by the Special Secretariat for Private Debt Management, May saw the highest number of debt settlements and final submissions of applications, in the two years of the Mechanism’s operation.
Specifically:
In May 2023 they took place 805 debt arrangements and 1,996 final regulatory submissions. In total, until the end of May 2023 5,435 debt settlements have been carried out which correspond to 1.83 billion euros of initial debts.
The number of new applications entered on the platform increased in the month of May 2023, following recent improvements to the extrajudicial mechanism, and rose to 4,243, up 900 from the average of the previous six months. The final submissions of applications were also increased by 50%, compared to the previous months.
Also important is maintaining the approval rate of the arrangements by financial institutions at a high level, which has fluctuated at 72% in the last six months.
As it is stated, “the Ministry of Finance and the Special Secretariat for Private Debt Management closely monitor the progress of the implementation of the out-of-court debt settlement mechanism, cooperate intensively with all the agencies involved and continue to support households and businesses for the best possible treatment of the critical issue of private debt debt”.
Submitting applications is now digital
In the meantime, from next month the new platform for the digital submission of debt settlement applications by debtors with bad loans. This is a system based on which banks and servicers should respond more quickly to debtors’ requests and at the same time justify possible rejection of the request.
In this way, the Bank of Greece will have the possibility to monitor the arrangements of red loans and the implementation of the Code of Ethics that it has established and which should be observed by all creditors, i.e. by both the management companies and the banks.
In this way, the SC tries to impose standardized procedures, mainly towards the management companies, for which there are also the most complaints. As the governor Giannis Stournaras has stated, he wants the Code of Ethics to be faithfully followed by the management companies as well, while he announced changes to the institutional framework which will contribute to improving the operation of the system.
The main objective, which will probably take the form of legislative intervention by the next government, will be the better and faster response of the companies to the requests – questions of the debtors.
Source: RES-MPE
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