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Council of Mortgage Lenders Advises European Commission on Underwriting Process

Council of Mortgage Lenders Advises European Commission on Underwriting Process

The Council of Mortgage Lenders has an idea on how to increase the number of mortgage loans which remain viable and don’t turn into gambling type negotiations - place at least a ten day cooling off period on them, after they are signed.  This is an idea being tossed around right now by the European Commission.  The CML commented on this practice, saying: “We understand that the Commission is considering a compulsory 10-day reflection period after the ESIS is given out for shopping around.  As the majority of loans in the UK are arranged by mortgage brokers, whose job is to shop around for the customer across the market, this again adds no value in the UK context.”

The European Commission (EC) wants borrowers to see how lenders from other countries present the information on products across Europe.

The EC continued to comment about how the information on the products are presented, saying: “If the European Standardized Information Sheet is now made a prescribed requirement across Europe, this will require amendments to, or replace, the Key Facts Illustration.

“This would have significant business costs but no obvious benefit to UK consumers as the information in each is broadly the same although ordered differently.”

The Financial Stability Board wants feedback on residential mortgage lending practices by the end of October.  The Board is an international body for national financial regulators and authorities in the interests of financial stability.  The advancement in how the process takes place should be improved by evaluating this feedback.

The CML made a sweeping statement by saying: “So we have new rules emerging nationally in the UK, across Europe as a whole, and now apparently also globally on mortgage underwriting.”

The Council of Mortgage Lenders cautioned the European Commission in pressing ahead with its new proposals.  The CML warned the EC not to let too much reform happen all at one for fear of compromising some important part of the process.

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