The European Mortgage Federation claims that certain new proposals for responsible lending will need industry consultation. Notable of them is the legal obligation to assess the credit worthiness of the borrower and the suitability of the products, as well as the obligation of the lender to inform the consumer of the reason for rejection in the case of negative credit worthiness.
These obligations may contradict the principle of freedom to contract as they are very subjective in nature and may introduce the possibility of increased legal exposure for lenders. This will also exclude a broader range of consumers from access to mortgage lending. THe
EMF fears that these obligations, in addition the to the new Basel III, will lead to further credit restrictions in Europe and runs contrary to repeated calls from the European Commission to Banks to lend more.
© EMF
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