# The mortgage adjustment system in Greece



## Brendan Burgess (23 Apr 2012)

This was presented to the FLAC Insolvency Conference in April 2012. 
The slides are here. The speaker is a consumer rights lawyer.

The system is so extraordinarily generous, I am not sure that I understood it correctly. I don't know why any lender would provide mortgages in Greece. 

I think it was introduced in 2010.

It's best illustrated by an example which comes from slide 9



total debt|€135,000 |to 6 banks
Value of apartment|€73,000|mortgage amount not given
First 4 years|€400 per month|paid proportionately to all creditors
Next 15 years|€62,050|paid to lender in equal instalmentsI got the impression that the €400 per month for the first four years was paid to the non-mortgage creditors, but this is a small point. 

If the creditors don't agree, then the borrower can appeal to the court and apparently, there is a 3 year waiting period.  However, the law has been changed so that the figures are backdated to when the debt write-off was applied for.

The scheme is not revised no matter what happens to the person's income over the coming years. 

The big issue for consumers is to "time the application properly". As house prices are expected to fall, they may end up paying less if they wait another year or so to apply for the scheme. 

One of the justifications for the scheme is



> Beneficial to credit institutions as it prevents an horizontal haircut and focuses on case-specific circumstances


which, I think, means that it is a better alternative than to reduce all outstanding mortgages by, say, 30%.


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## Brendan Burgess (23 Apr 2012)

I don't fully understand the statitistics in slide 12

12,000 proposals have been made (7,800 last year alone)

7,200 of these included proposals to deal with mortgage debt

60% of the proposals were accepted without going to court. 

5,200 (40%) went to court - so far, only 1,000 have been processed


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## Brendan Burgess (23 Apr 2012)

I think that slide 7 is interesting although it does not deal with mortgage debts. 

The Personal status is described as: 



> 65, married with two grown up children. One, aged 33, is unemployed and living with the parents



Because they have a 33 year old unemployed son living with them, they are entitled to more money. 

A friend of mine living in Greece has told me all sorts of stories about the Greek welfare and pension system, which I dismissed as just his bias. But maybe they are correct. Apparently, if a civil servant dies and his son is unemployed, he is entitled to claim his father's pension.  I took this with a pinch of salt, but maybe it's not too much of an exaggeration.


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## Brendan Burgess (23 Apr 2012)

This is a very funny "10 facts about the Greek Pension System" 



|Greece|Germany
Years of work to earn a full pension|35|45
Proportion of wages as pension|80%|46%
pension increases 2004- 2006|11%|0%


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