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Banks are being obliged to inform the client the maximum cost of the mortgages. They are also required to take into consideration the Euribor of the past 20 years.
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One of the main objectives is to reduce repossessions and foreclosures.
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Before signing the contract, the client must be understand exactly what product. The bank cannot have lack of transparency as also must be clear on what information and data is speculative.
Europe continues to build a stronger financial regulation. The last brick to be placed in this construction was the implementation of a Directive to handle the mortgage credits. Since the 21st go March, under their jurisprudence, the banks are obliged to inform, under all expenses and with all the information involving the granting of the mentioned loans.
Banks, due the mentioned Directive, are bound to offer all the information to the clients. This information must be personalized, and adapted to the needs of every client, especially at the pre-contractual phase. Only if this happens, will the users of the bank products be able to contrast with the characteristics of their mortgage, and make a proper decision.
All the decisions made by the clients when choosing a credit and analyzing the nature of these can only happen if the Banks informs them correctly. The omissive fraud has been very linked to the placement of mortgages, especially FX LOANS.
The compilation of the mentioned information must be provided back to the European Monetary Authority This feedback will be done in a standard format called ESIS (European Standardised Information Sheet). The mandatory information, in case of a variable rate, the financial institutions must inform the potential clients of how much and the maximum they can be charged whilst the duration of the mortgage.
Europe is trying to avoid the avalanche of clients that felt they were deceived with the Banks. The mortgages that involve FX LOANS generated an immense number of victims that united against this financial entities. This deceiving came in consequence of the signing of the contract, without really knowing what they were signing because the ann had not informed them correctly and there was a lack of transparency.
To this information, it is important to mention that also the client must always know all the expenses that they will have to pay in relation to the agreement of the credit. It is therefore necessary to reflect the interests, commissions, taxes, remuneration, credit intermediaries, appraisal costs, goods for the purposes, etc.
All the information given by the Bank also must clarify if the data and digits are estimated and speculative. This information must by clarified in this sense to reassure that the client does not feel they have been induced into the error. In between the requirements towards the European financial institutions is also running a simulation of fluctuations in interest rates may have during the life of the loan. The final objective is to reassure the fact that the clients know perfectly what product they are managing. The constant fluctuations of the money is something the clients must understand as also make sure that the Banks do not take advantage of these constant changes of the price of the money.
