The Council of the Notariats of the European Union (CNUE) has taken note of the European Commission’s White Paper on the mortgage credit market. The CNUE supports the Commission’s efforts to identify and eradicate failings in how this market works. Given the complexity of the subject, the CNUE welcomes the Commission’s strategy, namely the timely involvement in discussions of the professionals concerned.
The CNUE shares the European Commission’s main concern which is not to monitor integration of the mortgage credit market by means of a Community instrument at present. The Commission rightly works on the principle that the mortgage credit market has an essentially local dimension, EU citizens’ requests for cross-border credits being relatively few. Nor will this situation change in the near future.
Buying a home is an important moment in citizens’ lives. Consequently, making an application for a mortgage credit is of crucial importance for EU citizens both economically and personally. In this context, the CNUE highlights the fundamental role of consumer protection in the mortgage market. Moreover, European measures relating to the mortgage credit market should in no way compromise existing product diversity, thus bringing negative consequences for consumers. The CNUE agrees with the European Parliament on this.
Legal certainty and clarity are particularly important in real estate. Any measures taken to promote and integrate the market should take account of both of these aspects. The various historical, economic and cultural factors present in the Member States also need to be taken into account. Moreover, the close link between Member States’ property law and procedural law should be considered, which are in the Member States’ jurisdiction. As a consequence, any encroachment on the national register systems should be avoided on principle.
Given what precedes, the CNUE is convinced that European integration of the mortgage credit market is only useful if it is carried out with considerable thought and caution. The development of a secondary market for mortgages across Europe only works with specific connections. Given the legal certainty necessary, care should be taken regarding the clarity of rules on the law applicable to credit contracts on the one hand and the collateral contract on the other. The right to register and create collateral can only be based on the law of the country in which the property is situated due to the close link between the right of lien and the Member States’ property and register laws.
The notariat also supports the Commission’s initiative regarding harmonisation of the annual percentage rate of charge and early repayment.
The CNUE considers that the current mortgage credit crisis in the United States enables useful lessons to be learnt that the Commission should take into consideration in its future discussions on the subject. It is doubtful that increasing integration of the mortgage credit market in favour of consumers will bring a reduction in costs and a greater demand for mortgage credits and immovable property. At the same time, the American crisis shows that consumer protection is not guaranteed merely by the multitude of rights of withdrawal and written information that are difficult for consumers to manage. Before beginning follow-up measures to the current White Paper, it would therefore be appropriate to first assess the causes and repercussions of the “subprime” crisis so as avoid serious mistakes to the detriment of all operators and the internal market in general.
Finally, in the light of these recent developments, it would be more fitting to carry out an in-depth critical assessment of the concepts of consumer protection that have supposedly proved effective. Civil law notaries, in their capacity as trusted third party and given their role as impartial advisor, have an important role to play in this area.