The European Banking Authority (EBA) published today a consultation paper on draft Guidelines on arrears and foreclosure under the Mortgage Credit Directive (MCD). As foreclosure can have significant consequences for consumers, creditors should implement measures to attempt to resolve with the borrower any payment difficulties before initiating foreclosure proceedings. These draft Guidelines will ensure that such measures are developed and adopted consistently across the European Union. The public consultation will run until 12 February 2015.

The MCD sets out provisions in the area of arrears and foreclosure, and specifically requires that Member States adopt measures to encourage creditors to exercise reasonable forbearance before they initiate foreclosure proceedings.

To ensure that the high-level provisions of the Directive are implemented and supervised consistently across the EU, the EBA is consulting on draft guidelines that provide greater detail on how creditors across the EU should give effect to the relevant MCD provisions.

The Guidelines establish requirements in terms of policies and procedures, engagement with consumers, provision of information and assistance to consumers, resolution process and documentation of dealings with consumers and retention of records.

The draft Guidelines are based on the EBA Opinion on Good Practices for the Treatment of Borrowers in Mortgage Difficulties that the EBA had published on 13 June 2013, before the MCD was adopted.

The EBA expects to publish the final guidelines in Q2 2015. These would apply from the transposition date of the MCD of 21 March 2016.

Consultation process

Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. The deadline for the submission of comments is 12 February 2015. All contributions received will be published following the close of the consultation, unless requested otherwise.

1. The Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property (Mortgage Credit Directive) was published in the Official Journal of the Commission on 28 February 2014 with a transposition date of 21 March 2016.

2. The Opinion of the European Banking Authority on Good Practices for the Treatment of Borrowers in Mortgage Payment Difficulties was published on 13 June 2013.