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Lenders may have to give reasons for rejection as part of directive

Lenders could be forced to provide borrowers with the main reasons for rejecting a mortgage deal under the European mortgage directive.

Earlier this month, the European parliamentary body, the European Economic and Monetary Affairs committee, approved its mortgage regulation proposals.

The parliament is proposing lenders provide customers with the main reasons for rejecting them for a mortgage.

The European Commission is proposing lenders must provide all reasons while the Council of Ministers proposes lenders should not need to provide any reasons.

The three European Union bodies will now enter into so-called trialogue negotiations, set to start in September, where they will hammer out an agreement.

Lender trade body the European Mortgage Federation believes the EU will compromise by compelling lenders to give the main reasons for rejection.

Jennifer Johnson, senior legal adviser at the EMF says: “Between the commission and the council the compromise will probably fall in line with the parliament asking for the main reasons.”

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