The European Commission approved on Thursday the Greek Primary Protection Scheme for households unable to repay their mortgage loans and at risk of losing their primary residence.
According to a press release, the program has an annual budget of nearly 132 million euros and sets strict eligibility criteria along property value and borrower income lines.
Eligible borrowers will receive a grant corresponding to 20-50 pct of their monthly loan payment, depending on their income, provided that their loans are secured against their primary residence; and that they resume paying the residual part of their monthly payment.
If the borrower stops servicing its loan, the bank can initiate the foreclosure of the property, the statement said, adding that all banks will have to restructure the loans of eligible borrowers along the same requirements defined by the state.
The Commission concluded that, with respect to individuals, including those performing an economic activity, the measure does not involve any State aid. With respect to the banks that issued the loans, the Commission found that the scheme will provide an indirect advantage because it increases the amount of repayment the banks are likely to receive from the non-performing loans.
At the same time, the Commission’s assessment showed that this indirect aid would not create undue distortions of competition because the aid is limited to what is necessary to achieve its objective of ensuring that borrowers do not lose the house in which they live. Moreover, since all banks established in Greece will participate in the scheme, it is non-discriminatory among them. The Commission has therefore concluded that the scheme is well-targeted and limited in time and scope as required by EU rules, it clarified in its statement.
Finally, the scheme is expected to contribute to reduce the high burden of non-performing loans in the Greek banking sector.