Greece and its bailout creditors remain divided over how to toughen foreclosure laws, a European Union official said Monday, though the overall talks on getting the country the next batch of loans are on track.

Valdis Dombrovskis (photo), a European Commission vice-president for the euro, said Greece has already done many reforms, quickly. But he warned "there is no time to lose. There is a need to work very actively to modernize the Greek state and economy."

Greece has committed to broad reforms, savings and tax hikes to secure its third bailout package from its European partners. Bailout creditors are currently reviewing the government's compliance with the measures they had agreed upon before paying the country a 2 billion euro loan installment.

Greece is under pressure to lower the income and wealth criteria based on which non-compliant borrowers' primary residences enjoy protection.

Dombrovskis and the Greek government officials he met in Athens at the start of a two-day visit agreed that differences remain on the issue of foreclosures.

About 40 percent of all Greek bank loans are now in serious arrears, as successive income cuts over more than five years have left borrowers struggling to repay. At the heart of the issue are housing loans.

The left-led government says it wants protection for borrowers whose homes are worth up to 300,000 euros, and who earn up to 35,000 euros a year — about 75 percent of those affected. It says the creditors' counter-proposal — protection for homes worth up to 120,000 euros — would expose nearly 80 percent of borrowers to the threat of foreclosure.

Dombrovskis said the Commission wants protection limited to households that "clearly" need it.

"But there is a clear willingness (on) both sides to find a compromise," he added.

Government spokeswoman Olga Gerovassili said Athens will fight "all the way" to prevent an explosion in foreclosures.

"Greeks have reached the limits of their endurance — and many have exceeded them — after six years of austerity, and we can't now be discussing taking their homes away," she told Parapolitika Radio.

While Greece has no urgent need for the latest rescue loan installment, the review must be swiftly concluded. That will open the way for bailout money to recapitalize its battered banks by the end of this year. Otherwise, depositors with over 100,000 euros in the bank will be forced to take losses on their savings.

A successful review will also allow the start of talks on easing the country's crushing debt mountain, now at about 170 percent of GDP, through longer and laxer repayment terms on the bailout loans.

The government has already agreed to a series of tough measures, including hiking taxation on farmers and deregulating pharmacy licenses — sparking considerable resentment. Greek pharmacists launched rolling 24-hour strikes Monday, while farmers' associations are planning protests.

source: "Journal Star"