Brussels, 10/09/2013 (Agence Europe) - On Tuesday 10 September, the European Parliament endorsed the political agreement on the draft directive boosting consumer mortgage protection and encouraging more European mortgage lending.
MEPs backed the content of the new directive that will come into force after a two-year transposition period, but they did not adopt the draft legislation because, as a source at the European Parliament explained, one matter remains to be solved. The EP wants to have the power to verify, along with the European Banking Authority (EBA), that member states are complying with the EU rules without making excess use of the room for manoeuvre available to them under the directive.
Internal Market Commissioner Michel Barnier said that a final point remained hanging vis-à-vis whether or not explanatory documents should be added to the draft legislation. Lithuanian Finance Minister Rimantas Sadzius asked MEPs to pull out all the stops to overcome the final obstacle to definitive adoption of the new rules. If the EP and Council of Ministers manage to reach agreement rapidly, the draft legislation might be adopted at the October plenary.
Talking of the personal tragedies of consumers who defaulted on their mortgages after the 2008 financial crisis, Sadzius welcomed this new stage in EU mortgage policy that aims to avoid abuse by making people take a responsible attitude, to provide better information and better protection for consumers and to unite national markets by means of a mortgage lenders' and service providers' “European passport”.
The main aspects of the new rules are: a) a standard document of pre-contractual information needed to enable consumers to make an informed choice; b) lenders must make a better assessment of potential borrowers' ability to pay; c) greater transparency about the financial risks of mortgages taken out in foreign currencies; d) introducing a seven-day period in which it is possible for consumers to change their minds; d) a ban on linked sales; e) making it possible to pay off the mortgage early according to terms and conditions to be decided by the member states (early repayment penalties, for example).
Philippe Lamberts (Greens/EFA, Belgium) said that a hard line is taken on public debt, but when it comes to private debt, people are still hesitating about introducing rules to ensure a responsible approach is taken. (MB/transl.fl)