The EBA amends its Guidelines on arrears and foreclosure following changes to the Mortgage Credit Directive

The European Banking Authority (EBA) published today its amended Guidelines on arrears and foreclosure following the changes introduced in the Mortgage Credit Directive (MCD).

The EBA assessed the impact of the recent revision of Article 28(1) of the MCD and concluded that, in order to adhere to the principle that EBA Guidelines must not repeat, amend or contradict requirements set out in Level 1 legislation, the EBA Guidelines on arrears and foreclosure needed to be amended.

Guideline 4 on ‘resolution process’ has therefore been removed from the EBA Guidelines on arrears and foreclosure, as its content is now embedded in binding Union Law. The aggregate requirements set out in the MCD and the EBA Guidelines have remained unchanged.

Background and legal basis

The EBA issued its Guidelines on arrears and foreclosure (EBA/GL/2015/12) in 2015 to support the transposition of the provisions of Article 28 on arrears and foreclosure of Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property (MCD). The EBA Guidelines became applicable on the same day as the MCD itself on 21 March 2016.

In December 2021, Directive (EU) 2021/2167 on credit servicers and credit purchasers (Credit Servicers Directive – CSD), regulating the sale, purchase, and servicing of non-performing loans (NPLs) entered into force. The CSD introduced, inter alia, amendments to Article 28(1) MCD on arrears and foreclosure by replacing the existing wording with a near verbatim wording of Guideline 4 of the EBA Guidelines on arrears and foreclosure, which covers the resolution process between creditor and borrower. The amended Level 1 text became applicable at the end of December 2023.

The amended Guidelines will apply within two months of the publication of the translated versions.