Linkedin
locationCreated with Sketch.

24 Lagoumitzi St., Kallithea 17671

211.109.7286

info@eedadp.com

Youtube Linkedin

Clients – Debtors

Servicer - Debtor relationship

The relationship of the servicer with the is extremely important as it acts as the catalyst for the solving of a large financial problem that affects many households and businesses, the entire financial system and the economy of the country – that of NPLs. It is in everyone’s interest that sustainable solutions emerge through smooth negotiations between servicers and debtors 

The transfer of the management of a loan to any servicer company does not deprive the client of any rights held in relation to the original beneficiary of the claim (e.g. in relation to the bank that granted the loan or in relation to the supplier that had signed the original contract with the client). Just like the original beneficiary of the claim,  servicers apply in the exact same way:

  • the current institutional framework on consumer protection (Law 2251/1994)
  • the Banking Code of Conduct drawn up by the Bank of Greece for the servicing of non-performing loans
  • the relevant decisions of the Bank of Greece governing the operation of servicer companies

Also, according to the relevant legislation (Law 4354/2015), the transfer or assignment of the management of the claim does not worsen the position of the debtor or the guarantor, while, the servicer company is not allowed to unilaterally amend any terms of the contract or the interest rate.

Frequently Asked Questions of a Debtor

Listed below are answers to frequently asked questions that Association members receive from debtor customers:

What does the transfer of loans from banks to servicers mean for debtors? To what extent is a new opportunity being given to debtors, individuals and businesses to resolve long-term impasses related to their finances?

Servicer companies aim to find a sustainable solution to problems faced by debtors. Solutions such as amicable settlements (with or without debt forgiveness), personalized arrangements based on income criteria, the voluntary sale of property, Sale and Leaseback, etc., are widely used in practice by servicer companies and have already helped thousands of debtors.

What are the intentions of servicers regarding auctions?

The objective of servicers is, above all, to convert non-performing loans into performing ones, in order to ensure the sustainability of the arrangement and the ability of the individual debtor, or the company, to meet obligations on a long-term basis. Auctions are not in the interest of servicers and act only as a solution of last resort, in cases where there is a complete lack of cooperation from debtors, especially from those who have the capacity to meet obligations but insist on defaulting, the so-called "strategic defaulters".

Why do servicer companies focus on strategic defaulters?

Failure to meet obligations from debtors who are in a position to do so, on the one hand, harms banking credit due to the moral hazard it creates, and, on the other hand, weighs on the economy, as this burden is then shouldered by consistent debtors or taxpayers, or spreads to the economy by limiting the financial capacity of banks. The benefits of addressing the phenomenon of strategic defaulters impacts the economy at large.  

Are servicers only active in Greece or do they also exist in other countries?

The existence of a separate and distinct loan and debt servicing sector has also arisen as a necessity in other European countries facing similar private debt servicing problems. The idea of creating separate companies originated in Scandinavia in the 1990s. In all cases (Scandinavia, Italy, etc.) they were preceded by the accumulation of a significant stock of Non-Performing Loans, which burdened the banking system and hindered the growth of the economy. One of the most important actions adopted by European supervisory authorities to address the problem was the requirement to quickly transfer non-performing loan portfolios away from bank balance sheets, so that the risk of holding NPLs would be transferred to non-bank investors.

Why is a debtor not worse off when a loan is transferred from a bank to a servicer company?

Because the operating framework of servicing companies is explicitly provided for by legislation. In Greece, servicers operate within a strictly supervised framework, which absolutely guarantees the fair treatment of debtors. The law includes very specific provisions outlining the relationship of servicers with debtors. Thus, in all the cases of a claims transfer, the relevant regulations expressly provide that the position of the debtor does not deteriorate in any way, while the debtor holds onto all rights held in relation to the original creditor.

Can debtors have personalized solutions with the transfer of their loan?

It is reasonable to ask why servicing companies are preferred to banks. The answer boils down to the increased efficiency of servicing companies. servicing companies:
  • have accumulated know-how and experience,
  • employ specialized staff,
  • have developed technological infrastructures that demand time and significant capital investment.
A. The improved effectiveness of servicers compared to banks is due to their greater flexibility in providing solutions that help debtors handle their obligations which are adapted to each debtor's conditions. These solutions cannot be implemented within the strict banking framework, due to the supervisory rules that govern the capital adequacy of banks (e.g. the well-known EBA rules of the European Banking Authority). Servicer companies are not subject to the corresponding capital restrictions and for this very reason they are able to offer flexible and decisive loan restructuring agreements to debtors.

What resources do specialized servicers have compared to banks? What can’t banks do that servicers can?

It is reasonable to ask why servicers are preferred over banks. The answer boils down to the increased efficiency of the servicing companies. Servicers:
  • have accumulated know-how and experience,
  • employ specialized staff,
  • have developed technological infrastructure that demands time and significant capital investment.     a. The improved effectiveness of servicers compared to banks is due to their greater flexibility in providing solutions that help debtors handle their obligations which are adapted to each debtor's conditions. These solutions cannot be implemented within the strict banking framework, due to the supervisory rules that govern the capital adequacy of banks (e.g. the well-known EBA rules of the European Banking Authority). Servicer companies are not subject to the corresponding capital restrictions and for this very reason they are able to offer flexible and decisive loan restructuring agreements to debtors.

Legislation

The basic legislative framework that governs servicer companies is listed below:

National Regulatory Framework for Overdue Debt Servicing

L. 4354/2015

Servicing of non-performing loans, wage adjustments and other urgent provisions for the implementation of the agreement on fiscal objectives and structural reforms

ECA 118/19.5.2017

Framework for the establishment and operation of loan and credit receivables servicer companies

ECA_153_08.01.2019

CICD 195/1/29.7.2016

Revised Code of Ethics

Complaints

If you are a debtor and have a complaint or problem related to your loan, you can contact one of the following e-mail addresses – the one that corresponds to the servicing company you deal with.

HLSA

The Hellenic Loan Servicers Association (EEDADP) is a Civil Code non-profit company. It was founded in 2019 in Athens and its members are companies active in the loan servicing industry. All its members are supervised by the Bank of Greece.

Linkedin

Site map

Contact

24 Lagoumitzi St., Kallithea 17671, Athens
Tel. no.: 211.109.7286
E-mail: info@eedadp.com

© Copyright

2024

All rights reserved