The European Banking Authority (EBA) has published two good practice Opinions on (a) responsible mortgage lending and (b) the treatment of borrowers in mortgage payment difficulties.

The aim of the Opinions, which are addressed to competent authorities, is to promote common practices with a view to enhancing consumer protection and promoting the stability, integrity and effectiveness of the financial system. Both Opinions complement the related provisions expected to be set out in the pending EU Directive on Credit Agreements to Residential Property.

Opinion on responsible mortgage lending

The Opinion on responsible mortgage lending considers good practices on responsible lending under the following headings:

  • The verification of information;

  • Reasonable debt service coverage;

  • Appropriate loan-to-value ratios; and

  • Lending and supervisory processes and related good practices.

The Opinion contains 17 good practice guidelines and also includes details of a range of additional national approaches identified in an EBA survey of competent authorities. These details are included to allow competent authorities to consider the relevance of them for their own markets.

Opinion on the treatment of borrowers in mortgage payment difficulties

The Opinion on the treatment of borrowers in mortgage payment difficulties considers:

  • General principles;
  • Policies and procedures;
  • Provision of information and assistance to the borrower; and
  • Resolution process.

The Opinion contains 18 good practice guidelines under these headings.