For the United States, irresponsible home created a domestic housing bubble that, when it burst, helped to spark the global financial crisis. In an attempt to avoid repeating the mistake of creating property bubbles and fueling the Euro zone’s debt crisis, European Union negotiators are trying to finalize common rules on mortgage lending. The new legislation would mandate lenders in Europe’s $8.5 trillion mortgage market to check on the creditworthiness of borrowers, in an attempt to weed out “liar” loans. Also, a big problem in the past was that the workers who performed credit checks for banks and lenders had their pay directly linked to the amount of mortgages they approved, in a commission sort of way, but that is no longer allowed.
On behalf of EU governments, a spokeswoman for the Irish EU presidency said, “We are hoping to conclude talks with the European Parliament on Monday on these important new rules to protect consumers and mortgage holders.” If and when the deal is reached, the rules will need to stamped by all of parliament and the government of the EU before it fully takes effect in the middle of 2015.
Written by Kevin Zhang