The European Banking Authority (EBA) has published:
- final guidelines on creditworthiness assessment. Article 28 of the Mortgage Credit Directive (MCD) sets out provisions in the area of arrears and foreclosure and specifically requires Member States to adopt measures to encourage creditors to exercise reasonable forbearance before foreclosure proceedings are initiated. In order to ensure that these high-level provisions are implemented and supervised consistently across Member States, and to support the transposition of the MCD, the EBA is issuing these final guidelines. The guidelines provide greater detail on how effect should be given to the relevant MCD provisions in Article 28. The guidelines set out requirements on the establishment of policies and procedures, engagement with the consumer, provision of information and assistance to the consumer, resolution processes and documentation of dealings with the consumer and retention of records; and
- final guidelines on arrears and foreclosure. Article 18 of the MCD requires that, before concluding a credit agreement, the creditor makes a thorough assessment of the consumer’s creditworthiness, taking appropriate account of the factors relevant to verifying the prospect of the consumer to meet his/her obligations under the credit agreement. In order to ensure that these high-level provisions are implemented and supervised consistently across Member States, and to support the transposition of the MCD, the EBA has issued these guidelines which provide greater detail on how effect should be given to the relevant provisions in articles 18 and 20(1) MCD. The guidelines establish requirements on the verification of the consumer’s income, documentation and retention of information, identification and prevention of misrepresented information, assessment of the consumer’s ability to meet his/her obligations under the credit agreement, allowance for the consumer’s committed and other non-discretionary expenditures and allowance for potential future negative scenarios.
Both sets of final guidelines apply from 21 March 2016, the transposition date of the MCD. As further support for the implementation of the MCD, the EBA has also published an opinion on good practices for mortgage creditworthiness assessments and arrears and foreclosure, including expected mortgage payment difficulties.