On the 13 June, the European Banking Authority (EBA) published two Opinions on Good Practices for (i) responsible mortgage lending and (ii) for the treatment of borrowers in mortgage payment difficulties. Both opinions are addressed to competent authorities and aim at promoting common practices, with the ultimate view of enhancing consumer protection and contributing to the stability, integrity and effectiveness of the financial system. In particular, the Opinion on responsible for mortgage lending sets out good practices on the following aspects:

  • verification of information provided by the mortgage applicant;
  • reasonable debt service coverage;
  • appropriate loan to value ratios; and
  • lending and supervisory processes.

The Opinion on the treatment of borrowers in mortgage payment difficulties in turn, sets out good practices on the following:

  • general principles;
  • policies and procedures;
  • provision of information and assistance to the borrower; and
  • resolution process.

The two opinions compliment and provide suggestions on how to give effect to the related provisions expected to be set out in the pending EU Directives on Credit Agreements Relating to Residential Property (also known as Mortgage Credit Directive).