Regulatory reform of the mortgage sector needs to be consistent internationally as well as within Europe, according to the MEP who called for a 14-day cooling off period for mortgages.
Antolin Sanchez Presedo, a Spanish MEP and author of an economic and monetary affairs (ECON) report on the European Commission’s mortgage directive, suggests that Europe could look to the US for inspiration in determining its final rules for mortgage regulation.
Sanchez Presedo submitted the ECON report last month in response to the EC’s directive. Amongst its proposals, which the Council of Mortgage Lenders says would constitute a radical reworking of the original directive, are the introduction of a 14-day cooling off period after a mortgage offer has been made.
Now, in an article in the European Mortgage Federation’s latest newsletter, Sanchez Presedo says he supports the idea of further integration of European mortgage markets contained within the directive, as this is essential for the European economy.
But he also says that a regulatory reform of the mortgage sector should be consistent at international level.
He says: “Two important references are the US Dodd Frank Act and the principles developed by the Financial Stability Board in its thematic review on mortgage underwriting and origination practices published earlier this year. They are a good source of inspiration to avoid unnecessary penalties on consumers, to deal with data access and to introduce practical criteria.”
On a European level, Sanchez Presedo says that diversity among different countries should be seen as an asset rather than a problem.
He says: “On the one hand, we must preserve models that work adequately and are the result of lasting legal and cultural traditions. On the other hand, diversity is essential for innovation and financial inclusion.
“Therefore, the use of harmonisation should be targeted and limited to the areas where it is needed for the functioning of the internal market; leaving room for consumer protection and prudential measures at national level.
“In some areas, however, ceilings may be necessary in addition to the common grounds in order to ensure efficiency. That is what we could call a ‘framed harmonisation’.”