The process was initiated last year and from January 2024 the competitive dialogue has entered in its second cycle. The core developments of the process with prospective investors resulted in a 30% discount on the purchase price of the auctioned real estate properties, but also th repurchase possibility for offered to the debtor. In addition there were adopted a valuation process of properties with professional autopsy, and taxation standards similar to those attributed to REICs.
It is recalled that the entities participating in the process are: "Bain Capital Credit", "Christofferson, Robb & co, LLC", "Fortress Credit Corp.", Association of Companies "KAICAN Hellas – Beaumont Summit Financial DAC".
The Real Estate Agency will purchase through auction properties of vulnerable debtors and will lease them back to them for a 12 years period in order to avoid relocation from their residence and thus prevent forclosures.
How will the scheme operate
In particular, borrowers within a month of the Agency's operation should submit a request for inclusion through an electronic platform that will be created for this purpose. They will also have to consent to the investor for the autopsy (by an engineer, while a certified appraiser may also be present) in order to complete the property's valuation. The Agency has the right to reject the application in case of non-consent or if it detects significant violations that make the transfer of the property impossible. The costs of the autopsy and assessment are borne by the Carrier in any case and are not deducted from the transfer price.
The costs of regularizing any arbitrary constructions or uses are not taken into account by the certified appraiser for the valuation of the property right of the vulnerable debtor. The Entity pays the price of the transfer to the persons and within the deadlines set by Law 4738/2020 and since the price is payable to the receiver, the payment takes place to a notary designated by the Entity. The costs of settling any arbitrary constructions or uses are deducted from the transfer price. The Agency is responsible for carrying out the actions for the transcription of the above-mentioned notarial deed of payment as well as for the payment of notary, land registry and other authority fees.
At the latest within three calendar days from the finilising of the purchase of the main residence, the relevant lease agreement is signed between the vulnerable debtor and the Acquisition and Leasing Agency. In the event that for any reason the vulnerable debtor will be absent for contract signing, the lease agreement is signed on their behalf by the Agency, without the need to observe a notarial form.
The housing subsidy that vulnerable borrowers who will join the Agency will receive is scheduled to be paid during the contract's life, but also for as long as the lessee does not pay the rent after the termination of the lease contract, provided that the vulnerable debtor is still eligible for the allowance. In any case, the duration of the allowance cannot exceed the initial twelve-year duration of the lease agreement.
Rent calculation
The rent for the first year of the lease will be calculated based on a mathematical formula. The formula consists of three main variables, the average mortgage interest rate in the market according to the Bank of Greece, a margin (expressed as a percentage) per preferred investor as comprised in their bidding offer and the property's value as estimated following the professional valuation process.
Buy back right
With regard to the right to buying back the property after the end of 12 years (or even earlier without a "penalty"), the relevant ministerial decision determines the method of calculating the repurchase price, taking into account whether the transfer price is greater or less than the commercial value .
