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Cabinet approves state help for mortgage debtors

Beginning October of this year, the Slovak government might be able to provide assistance to citizens who cannot repay their mortgages as a result of the economic crisis. The government cabinet adopted a proposal at its meeting on July 15 for the Finance Ministry to prepare the necessary legislative conditions to implement the programme in cooperation with the Slovak Banking Association (SBA) and the bailout agency Slovenská Konsolidačná, a.s. The proposed aid scheme will consist of two stages, the SITA newswire wrote.

Beginning October of this year, the Slovak government might be able to provide assistance to citizens who cannot repay their mortgages as a result of the economic crisis. The government cabinet adopted a proposal at its meeting on July 15 for the Finance Ministry to prepare the necessary legislative conditions to implement the programme in cooperation with the Slovak Banking Association (SBA) and the bailout agency Slovenská Konsolidačná, a.s. The proposed aid scheme will consist of two stages, the SITA newswire wrote.

“The first stage will deal with assistance by a bank in the form of restructuring of the housing loan. State aid will follow in the second stage and will consist of providing assistance in repaying instalments of the restructured loan for a certain time,” states the Finance Ministry. The SBA expects about 1,000 defaulted loans per 10,000 newly unemployed citizens. The volume of state aid for this amount of defaulted loans is estimated at about €2.8 million. The start of the whole project will require the amendment of at least three laws.

State aid provided through Slovenská Konsolidačná is aimed at bank clients who drew housing loans and are unable to repay them after they lose their job as a consequence of the economic crisis. One of the conditions for provision of this aid is that a citizen has no other property for financial coverage of debt repayment.

Clients must have a loan contract secured by residential real estate and the contract must have been signed before December 31, 2008. The maximum limit on such mortgages is €83,000. Mortgage debtors can be included in the aid program from January 1 of this year, until the end of 2010. The program itself will exceed this period. In this period the process of bank loan restructuring in banks will be implemented and after it expires, the state will repay part of debtors' instalments on each debtor's behalf for one year at maximum. SITA

Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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