Proposal For E U Directive On Mortgage Agreements

[FreeTrader]

Published today:

Press release

Full proposal (PDF)

Creating a fair single market for mortgage credit – FAQ

Mortgages: better protection for European consumers

The financial crisis has shown the damage that irresponsible lending and borrowing practices can have on consumers and lenders, as well as the financial system and the economy at large. This is particularly important in today’s integrated EU marketplace. With today's legislative proposal, the European Commission shows its determination to ensure that such practices are not repeated in the future, and to help consumers to regain confidence in the financial system. Borrowers will enjoy a higher level of protection through robust rules concerning advertising, pre-contractual information, advice, creditworthiness assessment, and early repayment. The requirement to provide personalised information to the consumer through a European Standardised Information Sheet will allow consumers to compare mortgage conditions from different providers. The proposed Directive also aims to create a more efficient and competitive single market for mortgages by creating a level playing field for all actors involved and making cross-border activity easier. It now passes to the European Parliament and the Council of Ministers for consideration.

[Reck B]

Published today:

Press release

Full proposal (PDF)

Creating a fair single market for mortgage credit – FAQ

Borrowers will enjoy a higher level of protection through robust rules concerning advertising, pre-contractual information, advice, creditworthiness assessment, and early repayment.

Yeh, Thats what I call enjoyment!

Imagine the joy you will experience not having to bother actually doing any sums or research to make sure you can afford a mortgage!

I was going to take the family on a 2 week tour of Europe this summer, but I think signing a mortgage deal under this new European directive will be more fun for us all.

[Timm]

Probably long overdue.

But I wonder if this is the important bit:

Related initiatives

In parallel the Commission also presents today a working paper on national measures and practices to avoid foreclosure procedures. It also provides examples for national public authorities and creditors on how rising default rates have been addressed across the EU, with a view to avoiding foreclosure procedures where possible and reasonable. These include reconciliation procedures, mediation, modification of loan terms, to minimum length of time before starting foreclosure procedures, public rescue schemes and provision of independent debt and legal advice, as well as the collection of data and internal reporting.

[rantnrave]

Probably long overdue.

But I wonder if this is the important bit:

If the banks know they can't repossess, will they be more careful with their lending in the first place?

[R K]

This is particularly important in today’s integrated EU marketplace

As Greece, Ireland, Portugal et al were only just recently discussing with Germany.

[moonriver]

Published today:

Mortgages: better protection for European consumers

Borrowers will enjoy a higher level of protection through robust rules concerning advertising, pre-contractual information, advice, creditworthiness assessment, and early repayment. .

I wonder if these new rules will mean an end to all those mortgage loans that were dished out, to go beyond retirement age?

[moonriver]

Probably long overdue.

But I wonder if this is the important bit:

Probably long overdue.

But I wonder if this is the important bit:

with a view to avoiding foreclosure procedures where possible and reasonable.

Yes, good point.

And I wonder if it is the tax payer who is going to carry on forking out, to stop these people being foreclosed?

[bobthe~]

If the banks know they can't repossess, will they be more careful with their lending in the first place?

do you mean non-recourse loans like in America?

[libspero]

If the banks know they can't repossess, will they be more careful with their lending in the first place?

I doubt it.. they will simply factor more risk into the cost of everybody's mortgage.

Expect to see larger margins between the cost of high street mortgage rates and wholesale borrowing costs.

Edited March 31, 2011 by libspero

[Democorruptcy]

The EU is our only hope for any mortgage regulation.

Our banks clearly have the FSA in their hip pocket, so they have no intention of regulating anything that might lead to less debt and so less bonuses for bankers.

[leicestersq]

The EU is our only hope for any mortgage regulation.

Our banks clearly have the FSA in their hip pocket, so they have no intention of regulating anything that might lead to less debt and so less bonuses for bankers.

I thought that this regulatory authority was going back to the Bank of England. They have been talking tough at least. Different thing delivering mind you.

You have to lock people up and close down bad banks if they lend irresponsibly.

[Tired of Waiting]

The EU is our only hope for any mortgage regulation.

+ 1

I just hope they do a better job than with the "Stability and Growth Pact"... Remember?

"The pact was adopted in 1997,[4] so that fiscal discipline would be maintained and enforced in the EMU. Member states adopting the euro have to meet the Maastricht convergence criteria, and the SGP ensures that they continue to observe them.

The actual criteria that member states must respect:

* an annual budget deficit no higher than 3% of GDP (this includes the sum of all public budgets, including municipalities, regions, etc)

* a national debt lower than 60% of GDP or approaching that value."

http://en.wikipedia.org/wiki/Stability_and_Growth_Pact

http://en.wikipedia.org/wiki/Stability_and_Growth_Pact' rel="external nofollow">

They may have learnt the lesson now.

Our banks clearly have the FSA in their hip pocket, so they have no intention of regulating anything that might lead to less debt and so less bonuses for bankers.

Actually it is not only the bankers fault, or VI. The new government also does not want a HPC, like the previous one, coz the root cause is that the vast majority of the country / voters do not want a HPC.

Edited March 31, 2011 by Tired of Waiting

[Ash4781]

How much cost would this add to a mortgage?

edit: thanks for the link

Edited March 31, 2011 by Ash4781

[Tired of Waiting]

Published today:

Press release

Full proposal (PDF)

Creating a fair single market for mortgage credit – FAQ

It looks like they will leave the most powerful tools for the member states:

"Member States may issue guidance on the method and criteria to assess a consumer’s creditworthiness, for example by setting limits on loan-to-value or loan to income ratios."

On page 19, (24)

[sarahleyburn]

The EU is our only hope for any mortgage regulation.

Our banks clearly have the FSA in their hip pocket, so they have no intention of regulating anything that might lead to less debt and so less bonuses for bankers.

Yep, it looks like this directive could result in restrictions on some new BTL lending, despite CML's lobbying (link).

The CML says:

“Although we successfully persuaded the government here that buy-to-let shouldn’t be regulated under a mortgage regime in the UK, it may well come out of Europe. The way the draft directive is put together at the moment means that it will get caught. There is a good chance of taking out buy-to-let where it is done with professional landlords but personally I think we have got less chance of getting it out for individuals. So the parent buying a property for students going away to university, second homes being let out, all those sort of things may be regulated by Europe. I think we stand less chance of getting those out of the directive. But we’re doing our best and there’s still a way to go."

(Apols if this is old news on here - don't think I've seen it posted.)

[Tired of Waiting]

Yep, it looks like this directive could result in restrictions on some new BTL lending, despite CML's lobbying (link).

The CML says:

“Although we successfully persuaded the government here that buy-to-let shouldn’t be regulated under a mortgage regime in the UK, it may well come out of Europe. The way the draft directive is put together at the moment means that it will get caught. There is a good chance of taking out buy-to-let where it is done with professional landlords but personally I think we have got less chance of getting it out for individuals. So the parent buying a property for students going away to university, second homes being let out, all those sort of things may be regulated by Europe. I think we stand less chance of getting those out of the directive. But we’re doing our best and there’s still a way to go."

(Apols if this is old news on here - don't think I've seen it posted.)

Thanks for the update sarahleyburn, this may be very important. Wouldn't it affect our REITs (Real Estate Investment Trust)? If so, it may restrict REITs' power to sustain house prices.

[sarahleyburn]

Thanks for the update sarahleyburn, this may be very important. Wouldn't it affect our REITs (Real Estate Investment Trust)? If so, it may restrict REITs' power to sustain house prices.

AFAIUI it will affect individual landlords (eg accidental landlords), not those operating as a business, so I think REITs would be exempt. I'm sure there'll be ways to get around it but it would mean a new hoop to jump through / deterrent to the renting out your old property when you "can't sell" it trend that's going on at the moment...

[leicestersq]

The EU is our only hope for any mortgage regulation.

Our banks clearly have the FSA in their hip pocket, so they have no intention of regulating anything that might lead to less debt and so less bonuses for bankers.

I would have said that we would be better off without any mortgage regulation at all. The cost of all the regulation can be given back as reductions in tax.

And if banks get into trouble, just let them fail.

And lock up the crooks at banks who earn big bonuses via false accounting, and seize their assets. A few felons in jail for a long time focuses the mind.

[Snugglybear]

I would have said that we would be better off without any mortgage regulation at all. The cost of all the regulation can be given back as reductions in tax.

And if banks get into trouble, just let them fail.

And lock up the crooks at banks who earn big bonuses via false accounting, and seize their assets. A few felons in jail for a long time focuses the mind.

Realistically, how likely is this?