Interview with Filippos Filippides, member of the “Sale by auction STOP” committee, against the sale of property by auction following debt default.
26 January by Eva Betavatzi , Filippos Filippides
SoliGrecs Nîmes, http://soligrecsnimes.collectif-citoyen.fr/2016/10/24-heures-avec-viome/
Prior to Greece’s joining the EEC (European Economic Community) in 1981, Greek banks granted mortgages with very high interest rates
When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…
The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. , reaching up to 25%. With the country’s entry into the EEC, rates dropped to 16%. Then, as soon as the euro was adopted, mortgages grew exponentially, allowing debtors to mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. up to 75% of the value of their goods, while consumer loans could cover the remaining 25%, opening the doors of borrowing to more and more households. The economic crisis put an end to this practice and the insolvency of households had catastrophic consequences, notably in terms of the issue of the right to housing.
As a consequence for the past months, Greece has experienced a wave of public sales due to non-performing loans called “NPL”. NPLs are loans that debtors are no longer in a position to pay back. In practice, a significant proportion of the population has seen its income tumble, even disappear, within a few years, and has found itself insolvent, which has led creditors (banks, the state and various private actors) to resort to public sales, resulting in evictions. |1| This phenomenon has caused a dire housing crisis, leading to the creation of the “Sale by auction STOP” committee.
Could you tell us about the context in which your movement was created?
The sale of property via auction due to default on repayments has always taken place in Greece, even before the crisis. The sales never concerned primary residences, or even homes that one could call “working class”, meaning homes in primary or secondary occupation but of a modest size, as was the case at the beginning of 2010. They normally affected, for example, secondary homes of a large size, pleasure crafts, but also goods linked to loans concluded between businesses. At the time, one never heard of sales linked to non-performing loans with banks, even when owed to the state, as debtors could have recourse to other loans to prevent potential insolvency, so much so that loans were almost always paid back. The most common instances of sale by auction concerned loans concluded between businesses or bankrupt businesses that had to pay their employees.
Debts towards businesses of a public nature (DEKO) were even less common. Sales by auction due to debts to these businesses began in 2010. The number of non-performing loans also grew around that time. Moreover, the state, as well as being a creditor, was directly involved in these auctions as, by contrast with banks, the state could resort to sale without going through a civil court. Seeing elderly people losing their homes due to their inability to pay their electricity bills, or people with reduced mobility finding themselves on the streets for the often ridiculous amount of 500 euros, we had to set up an opposition movement. That’s the context in which the popular movement against sales by auction was born.
You described the social context to the mobilization, could you give us more information about the recent legislative change making home evictions easier?
Before PASOK’s (the “socialist” party of Greece) “Katseli” |2| law was passed in 2010, a law by the conservative right-wing New Democratic (ND) party called the “Hatzidakis” law put in place an upper limit of 200,000 Euros, below which any evictions were illegal. This ban applied equally to primary and secondary residences. But following the crisis, more and more people found themselves in a position where they were unable to pay back their loans. To respond to this situation, PASOK proposed the “Katseli” law aimed at protecting only primary places of residence, no matter the amount of non-repaid debt or the value of the house. However, the upper limit of the previous law, which also applied to secondary residences, was challenged with the application of the new law, until this completely disappeared in the third memorandum, which invalidated it. This had the consequences previously described.
The current government hasn’t stopped saying that primary residences can’t be seized, but this is not true, because the conditions necessary to benefit from the “Katseli” law are almost impossible to assemble, and only apply to a very small number of debtors. PMEs are not protected either. There are people who hypothetically use their homes as collateral Collateral Transferable assets or a guarantee serving as security against the repayment of a loan, should the borrower default. to borrow money from a bank in order to start their businesses. They are currently about to lose them. Their lands are also confiscated, which leaves their family property under threat.
It is also important to note that in Greece there are no community centres for homeless people. Without accommodation, nobody can find work. Without work, nobody can survive. These evictions are therefore criminal acts.
What are your opinions with respect to changing the situation? For example, in your opinion, would the struggle you are leading remain legitimate in cases of sale by auction of secondary homes or a recreational home?
Of course before 2010, many people benefitted from the situation, particularly from the “Hatzidakis” law, but these people represent a minority. I don’t think it is possible to allow some evictions more than others. Even if some people benefitted from generous salaries before the crisis, they are not responsible for the drops in their incomes, they couldn’t have predicted when taking out their loans that they would so quickly find themselves in such dire straits. The crisis affected all of us, and very quickly, and this speed only worsened the problem as it started a domino effect.
We must not forget either that, under pressure from the Troika
Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.
IMF : https://www.ecb.europa.eu/home/html/index.en.html , the changing legislative context (in reference to the laws voted between the 22nd and 23rd of July 2015 as a condition to the conclusion of the third memorandum) |3| only served to reinforce the position of the banks in relation to their debtors. They acquired significant privileges, notably with regards to facilitating evictions and the sales of property in cases of non-performing mortgages, putting already vulnerable households in a position of weakness. The third memorandum also introduced the possibility of putting sales by auction online, thus bypassing civil tribunals and the contestation there, but this law hasn’t yet been applied due to the widespread strikes of lawyers and notaries in recent months. The debtors we defend are therefore all, without exception, victims of the agreements between the Greek government and its creditors.
In my opinion, the obligation imposed on people to pay a debt that they can’t pay back for reasons outside of their control is illegitimate. They found themselves having to bear the brunt of the crisis: that’s not fair. They are held entirely responsible for the situation even though the banks are also responsible, and the state as well. In effect, Greek banks are not prevented from granting loans which violate the conditions in force, namely that the proportion of repayment cannot legally exceed 40% of the debtor’s monthly income. They did not hesitate to offer additional loans to cover the rising shortfalls in mortgage
A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. repayments. They therefore pushed households to borrow, without considering their solvency, and now they harass them so that they pay the money back.
Besides banks were recapitalised by the state several times without any measure being taken regarding non-performing loans. The state even guaranteed repayment for some of these loans under certain conditions, where the debtors were considered completely insolvable due to their very low annual incomes. |4|
The majority of the opinions I am expressing are personal. Not all the members of “Sale by auction STOP” necessarily share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. these views, like certain members from the KKE or Antarsya parties who only think it necessary to defend the “workers” and not all insolvent households. I am in favour of abolishing the “Katseli” law in order to create a new law, which protects all debtors without exception. The whole of Greek society paid too many debts, with two exceptions: the holders of capital who had the possibility of leaving the country, and large corporations. I insist that we are not a political group, we are an action group.
What are your current means of action? Could you tell us about your work in tribunals and your website? Does your movement concern private individuals or PMEs as well? And finally, could you explain what happens when you manage to quash a sale by auction?
We go to civil tribunals in small groups of five or six people. It depends on the court. In Athens for example, there are sometimes thirty or forty of us because there are different court rooms and we try to send about ten people to each court room. Legally, we have the right and even the duty to be present during hearings but generally the police come to throw us out. It’s the notaries that call the police. Some of them are paid by the banks.
We have succeeded in quashing certain sales by auctions thanks to mass mobilisation. The notaries went on strike for several weeks, every Wednesday, the day of auction, because of the pressure that we exerted. However, the process doesn’t stop there because there are several stages which depend on a notary. In effect, after the quashing of some of the sales, there are two possibilities: either it’s considered to be completely cancelled (a rare phenomenon), or it’s considered to be postponed. A second sale is therefore organized on the basis of a new “commercial” price set by a bailiff who calls in a private business. In case of cancellation of the second sale, a new price is set which equates to a third of the “commercial” value. The sale can once again not take place and so the auction sales start from one euro. The eviction can then take place for one euro!
We have created a web page where we publish information that we manage to gather on evictions. We detail the place and the nature of the property. We do avoid to publish the name of the person concerned even if, in my opinion, that’s a bad thing because these people have no reason to hide or protect themselves. They are often not aware that they are victims. Sometimes people don’t go to the hearings due to fear. Some are also ashamed. Here I can mention the example of an elderly person who tried to persuade the judge that the house wasn’t hers.
Remember though that these actions against public sales which succeeded haven’t yet had any effect since all the procedures will, from this point on, happen online. We are therefore going to have to change our strategy.
On the other hand, one thing that hasn’t changed is that we continue to encourage victims to defend themselves, because it’s their most fundamental right against the state and the banks that blame them in order to divide the population. They create confusion in such a way that, instead of solidarity against this flagrant abuse of the financial system, some people, who are often victims of the crisis themselves, benefit from the wave of public sales in order to buy homes at low prices.
Translated by Trommons. Revised by Christine Pagnoulle.
|1| Note that in Greece, in contrast to what happens in Spain or in Cyprus (where the banks are the owners of homes until the complete repayment of the loan), public sales take place before eviction.
|2| Name of the Minister of the Economy, Competitiveness and Merchant Navy, Louka Katseli, in Georges Papandréou’s government
|3| These laws, imposed by creditors, rebuild the civil procedure code. This code provides that, in cases of insolvency, private bankers will henceforth have the status of privileged creditors before the state. Note that the majority of provisions in the new Code were rejected by the profession (judges and lawyers) by a landslide vote of 93% and had not been adopted by preceding Greek parliaments before Syriza came into power.
|4| See on this issue http://www.cadtm.org/The-Evolution-of-the-Discussion-of