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Georgian Authorities Admit their Inability to Solve the Problem of Mortgage Debtors

The Government of Georgia acknowledges that campaign promises to solve the problems of debtors on mortgage loans were unrealistic.

Two years have passed after the elections in October 2012 but despite numerous assurances,  any mechanisms for dealing with the problems of debtors who may lose apartments for the payment of loans, have  not yet been  created in the Georgian Parliament. No specific legislative initiatives in this regard have been submitted to  the highest legislative body of Georgia, and debtors require solutions to their problems but to  no avail.

Moreover, some members of the ruling party distance themselves from this campaign promise and say they do not see any way to solve this problem.

Why do the authorities not solve this problem and why they forgot this  very important promise? Any branch of government does not give any concrete answer on this. All MPs are just trying to get away from talking about this topic,  in the meantime statistics is alarming – 180 000 families face the eviction and deprivation of housing.

Gedevan Popkhadze,  Deputy Head of Human Rights and Civil Integration Committee of the Parliament, who last year took the initiative to delay the eviction process  of debtors on mortgage loans for a period of six months, which was not passed by Parliament,  is stubbornly silent and avoids talking about it.

Then the MP said that if a decision was taken, he would give up his mandate, however, the law was rejected, and Gedevan Popkhadze is still a deputy from the ruling majority while the statistics is getting worse and worse.

Is there a real opportunity to solve this problem, what is the international experience in this matter, andhow such problems are solved in a civilized world?

In Europe, a regulation is imposed which prohibits banks to make loans secured by real estate in which the client lives. Why such a measure, which would create a legal mechanism that reduces the possibility of depriving a person of property, is not taken in Georgia? The government has no response to thisquestion.

Moreover, many believe that such a rule that works in Europe will be unsuitable for Georgia.

In particular, the expert Levan Kalandadze believes that this  European model will not justify itself in Georgia, as if  such regulations are enacted, almost no one will be able to use the mortgage loans.

“If the economic situation improves, then this model may be effective. The introduction of such regulation at this stage is  not rationally and pragmatically  as in Georgia there is a very small number ofapartments  in which their owners do not live. While the demand for loans is large. Apart from that, inthis case the banks will have too big credit resource in their portfolio but it is not necessary, “- said the expert.

Suffice it to say that the intervention of banks and the then Prime Minister Bidzina Ivanishvili prevented to  take the initiative on the six-month moratorium on the eviction of mortgage debtors.