Expats Running Out Of Time To Start Mortgage Claims

Expats in Cyprus caught up in the Swiss Franc mortgage scandal are running out of time to trigger a legal challenge against their lenders.

A law to help expats who were judged as victims of mortgage misselling was voted in years ago and the deadline to take lenders to court has been extended twice – but is now ticking down to end on December 31.

The limitations rules allow borrowers to give notice of a claim against their lender, but once the clock runs down, they cannot start a challenge in the courts.

The rules give different time limits for a wide ranging number of civil claims.

The limitations law was aimed at helping expats with foreign denominated mortgages in Cyprus make a claim against their lender.

Most mortgages in default in Europe

The majority of loans were in Swiss Francs and taken out before the end of 2009, so the six year limitation period runs out at the end of this year.

At the time, Swiss Francs were pegged against the euro and offered a hedge against currency fluctuations, but when the Eurozone went into recession, the value of the Swiss Franc soared along with mortgage repayments and the value of debts against property.

The situation worsened when the Swiss government unpegged the Franc from the euro and the stronger free floating franc made the mortgages even more expensive.

Cyprus has the highest number of mortgages in arrears in the European Union.

The government estimates nearly 50% of all home loans valued at 28 billion euros are in arrears.

British borrowers chased down

The figures vary between the government, banks and central bank as each has different counting rules and definitions for ‘non-performing’ loans.

Many of the loans are held by British borrowers on second homes or holiday lets on the Mediterranean island.

Vast tracts of new apartment and villa developments stand empty and unfinished across Cyprus as borrowers have stopped paying mortgages and developers cannot afford to finish construction – and even if they did no one wants to buy.

Some banks have taken advantage of the UK’s special relationship with Cyprus to launch legal proceedings in Britain to take legal charges against the homes of owners with mortgages in default.