Wednesday, 11 December 2013

Mortgage Credit Directive, the ball is now in the Council's court

Earlier this year, we had reported that the European Parliament, both through its Economic and Monetary Affairs Committee and in a plenary vote, had manifested its support for the Commission's proposal on a Morgage Credit Directive. On Tuesday, the Directive has been approved in first reading, which means that now the word is to the Council, that might decide to approve the directive or to send it back to the Parliament with amendments.

Some key features of the proposed directive are:
  • the introduction of a standardised information sheet, which should make comparing different offers easier and also include "worst case scenario" information;
  • the establishment of a series of business conduct rules aimed at preventing malpractice and conflicts of interests;
  • esuring that consumers are given the chance to repay the debt earlier than originally agreed;
  • a "passport" regime aimed at making it easier for credit providers to do business cross-borders;
  • european-wide standards for the credit-worthiness assessment of mortgage applicants.
  • rules facilitating the "smooth" handling of arrears and other repayment difficulties.
The impact of the rules would vary greatly from country to country. For instance, the Commission's impact assessment reports that in 2006/2007, a stunning 45% of UK mortgages were granted without the consumer's income being verified, a figure which is unlikely to represent the EU's average. An interesting collection of fact and figures has been put together in a rich Commission memo.

The text of the proposed directive can be dowloaded here (part II).

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