EBA has published two Opinions on good practices to credit institutions to apply to ensure they manage adequately potential risks associated with mortgage lending and with borrowers in mortgage payment difficulties. The Opinions cover, respectively, responsible mortgage lending and treatment of borrowers in mortgage payment difficulties. Key points the Opinions address include:

  • verification of information provided by the mortgage applicant;
  • reasonable debt service coverage;
  • appropriate loan-to-value ratios;
  • lending and supervisory processes;
  • general principles and policies and procedures for dealing with borrowers in difficulties;
  • provision of information and assistance to the borrower; and
  • resolution process.

EBA says it expects authorities to consider the impact of these Opinions also on non-mortgage lending. (Source: EBA Publishes Responsible Lending Opinions)