The Commission White Paper on Mortgage Markets: Inching towards consensus…but missing the big picture. ECRI Commentaries No. 4, 1 February 2008

[From the Introduction]. Efforts by the European Commission to harmonise mortgage credit date back to the 1980s. In the past, they invariably produced the same result: exclusion from or special treatment of mortgages within central financial sector directives, on the grounds that these were traditional business processes and funding instruments hinging upon national legal setups. The internal European market was deemed irrelevant. The White Paper on the Integration of EU Mortgage Credit Markets of December 2007 rejects this protectionist line of argument for good reasons, but it pays its dues to the entrenched opposition by pursuing legal and regulatory reforms only in selective areas of early repayment, responsible lending, APRC and precontractual information. Other issues are left to recommendations and a new round of research and stakeholder discussions. Since the paper’s formulation last fall, the proliferation of unsound practices in the mortgage sector has culminated in a crisis directly affecting Europe, with the consequence that the legal-regulatory discussion has already moved beyond integration to questions of stability and sustainable sector development. A limited approach like the one adopted in the White Paper cannot begin to address those challenges, nor is it likely to have any greater chance at political success than a more comprehensive one. The current financial crisis offers an important opportunity to introduce reform. The odds are considerable, however, that that opportunity will be lost in the search for consensus down to the very last stakeholder