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Greece-Creditors Agree to Save Only Poor Households from Auctioning

25s18akinita1-thumb-largeAfter hours of negotiating, Greece and creditors agreed that only the poorer families unable to pay their mortgages will save their homes from foreclosure, the measure applying to about 25 percent of people in debt.
The meeting between Finance Minister Euclid Tsakalotos and his negotiating team and the representatives of lenders – the European Commission, European Central Bank, European Stability Mechanism and the International Monetary Fund – finished a little after 1 am on Tuesday.
“We have reached an agreement on everything, including the 48 prior actions,” Tsakalotos said after yet another marathon meeting. The agreement is expected to be confirmed in a teleconference meeting with the Euro Working Group so that it can be voted on by Thursday night at Greek Parliament.
Athens is expecting to receive a 2-billion-euro loan subtranche and later 10 billion euros for bank recapitalization after the Euro Working Group would give ESM the green light for unlocking the funds.
According to the agreement, owners of homes worth 170,000 euros or less who fail to repay their loans are divided in three categories:
Those with an annual income of 8,180 euros or less for a single person,13,917 euros for a married couple and 20,639 for a family with two children (5,714 per child) will pay a small monthly amount to the bank. If they cannot afford that, the state will establish a fund with 100 million euros to pay the installments for such cases. About 25 percent of bad loans belong in this category.
In the second category, a single person with income of 13,906 euros for a single person, 23,659 euros for a couple and 35,086 euros for a family of four will renegotiate with the bank and their ability to repay their loans will be assessed. Those debtors will make monthly payments according to their income and household expenses.
The third category includes debtors who have expensive mortgages and high incomes but systematically avoid paying their dues. It is not specified what criteria will apply to those, but they will not be protected from auctions if they continue to default.
Regarding non performing business loans and the lenders request for selling bad loans to distress funds, new negotiations will take place and that will be decided in December.
Changes to settlement of debts to the state in the 100 tranches scheme include stricter terms so that people who delay payments are penalized. The leeway that debtors have to make payments in 30 days will now be shortened to 15 (or 20) days from June 2016 and then shortened further to 15 (or 10) days from January 2017. From 2017 onwards there will not be even a day’s delay accepted.
Regarding non-overdue debts, those will be settled in 12 installments. This will be beneficial for those who have difficulties in meeting the tax hikes. To settle tax dues in installments, taxpayers would be able to submit a document to the tax office along with their tax statement in order to show that their financial difficulties are genuine.
Finally, regarding the imposition of 23 percent value added tax on private education, Athens and creditors agreed to scrap the measure altogether and replace it with an additional levy on lottery type gambling games.
According to government sources, the omnibus bill will be tabled in Parliament on Tuesday and voted on Thursday.

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