On 1 June the European Banking Authority (EBA) published its final Guidelines on creditworthiness assessment, as well as its final Guidelines on arrears and foreclosure. These Guidelines support the national implementation by Member States of the forthcoming Mortgage Credit Directive (MCD). They will apply from 21 March 2016 (the transposition date of the MCD) and will ensure that consumers are protected consistently across the European Union when interacting with creditors. The Guidelines provide greater detail on the MCD provisions which aim to ensure national authorities implement the MCD consistently. They provide further detail on the requirements of Articles 18, 20(1) and 28 MCD. The EBA also published the Opinion on Good Practices for Mortgage Creditworthiness Assessments and Arrears and Foreclosure, including expected mortgage payment difficulties.
The Guidelines on creditworthiness assessment establish requirements for verifying consumers' income, documenting and retaining information, identifying and preventing misrepresented information, assessing consumers' ability to meet their obligations under the credit agreement, considering allowances for consumers' committed and other non-discretionary expenditures, as well as allowances for potential future negative scenarios.
The Guidelines on arrears and foreclosure establish requirements in terms of policies and procedures for the early detection and handling of payment difficulties including staff training, engagement with consumers, provision of information and assistance to consumers, resolution process and documentation of dealings with consumers and retention of records.
The revised Opinion on Good Practices for Mortgage Creditworthiness Assessments and Arrears and Foreclosure, including expected mortgage payment difficulties, lists additional and non-binding good practices that the EBA has observed across Member States.