The Commission's legislative proposals on residential mortgage credit have been discussed at the Economic and monetary affairs Committee by MEPs. The draft report presented to the Commission proposal aims to achieve certain standards across the EU, without imposing a one-size-fits-all approach that could undermine cultural and economic differences that exist between Member States.

The Economic affairs Committee at the European Parliament discussed the draft report to the Commission's legislative proposals on residential mortgage credit considered a cornerstone in restoring consumer confidence. The draft report is a response to such proposals and it promises improved consumer protection and proposes standards to make mortgage markets more stable and flexible and better serve the real economy. For example, in comparison to the Commission's proposal, the draft report considerably widens the legislation's scope both to protect consumers and also to make the sector function better.

The draft report also seeks to tackle some existing features and practices that warrant improving. It pushes for ways to decrease market-share concentrations. Moreover, it also calls for a reduction in the proportion of interest-only loans (where capital is only repaid at a later stage in a lump sum). Additionally, it requires that income verification become more of a standard practice when lenders assess mortgage applications. Around 50% of mortgage applications were processed without such checks in 2008.

On the report, provisions have been added to better guarantee correct valuations of properties, thereby reducing situations where lenders, due to over-valuating the properties on their books, do not have sufficient collateral to cover themselves in case of defaults. The draft report also tackles remuneration practices of lenders to reduce bad incentives and conflicts of interest. In addition, in order to reinforce consumers protection, it provides more detail on the information borrowers must be made aware of before taking out such loans and it would require Member States to develop educational campaigns. A stronger accent is placed on the post-contractual life of a mortgage, particularly regarding more flexibility, rather than only the pre-contractual phase.