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Showing posts from February, 2016

The Mortgage Credit Directive - Guidelines for Conveyancers

The Mortgage Credit Directive (MCD) introduces a European framework of conduct rules designed to foster a single market for mortgages and to protect consumers.
The MCD will be implemented in the UK by the Financial Conduct Authority (FCA).  The Rules are effective from 21 March 2016, although firms can elect to adopt the majority of them from 21 September 2015.  This will assist lenders in managing pipeline in the absence of any transitional rules. 
Any ‘new agreement’ entered into after 21 March 2016 will need to be MCD compliant and therefore, lenders will need to review their pipeline and ensure that, where required , additional disclosure is given to customers, along with the offer of a 7 day reflection period
The MCD, once implemented, will impose various requirements on lenders, including:
Assessing affordability:
Lenders must conduct an affordability test, looking at consumers' income and expenditure to ensure that they can afford the mortgage. This requirement to undertake an …