The European Commission has published proposal for a directive on credit agreements relating to residential property. Please see link. http://ec.europa.eu/internal_market/finservices-retail/docs/credit/mortgage/com_2011_142_en.pdf
The proposal covers all loans to consumers to buy a home as well as certain loans to consumers to renovate a home. It also covers credit intermediaries.
The proposed directive includes measures relating to:
- Advertising and marketing.
- Pre-contractual information.
- Advice.
- Credit worthiness and suitability assessments.
- Early repayment.
- Regulation of credit intermediaries and non-credit institutions providing mortgage credit.
There will be a European Standard Information Sheet to assess consumers’ ability to repay the loans. Creditors will be required to refuse to grant credit if the creditworthiness assessment determines that the credit would be unsuitable for the consumer. Equally however borrowers must provide all necessary and correct information to enable the creditworthiness assessment to be carried out.
The proposal has been submitted to the EU Parliament and Council but will need to be adopted and then need national measures to come into force.
The Commission at the same time published a working paper outlining national measures and practices to avoid foreclosure procedures for residential mortgage loans. Please see link. http://ec.europa.eu/internal_market/finservices-retail/docs/credit/mortgage/sec_2011_357_en.pdf
