On 26.2.2016, the Federal Council passed the Law on the Mortgage Credit Directive. In particular, it aims to protect consumers from insolvency and oblige banks to better audit their clients before lending.
Loans only after close scrutiny.In the future, a loan may only be granted once the credit institution has carefully examined whether the claimant is solvent. The customer can terminate the loan agreement at any time – without payment of a prepayment penalty – if the lender has violated his obligations and despite the lack of creditworthiness, a contract has been concluded.
For real estate loans, the review must be particularly thorough. Because with a loan for the purchase of an apartment or a house, the buyer enters high financial obligations and thus risks. Before concluding a real estate loan, the lender must fully understand the client’s financial and personal situation, preferences and goals. He should be able to make a suitable recommendation.
Tying transactions are inadmissible
In the case of real estate loans, there is also a widespread ban on so-called tying transactions in which the loan is only available as a package with other financial products or services, such as savings accounts, Pfandbriefe or insurances. Exempted from this are consumer interest products such as Bauspar or Riester savings contracts.
Annual percentage rate of charge
The calculation of the annual percentage rate of charge shall include the interest to be paid by the consumer and any other costs, including any intermediation costs.
No eternal right of withdrawal
In order to exclude a “perpetual right of revocation”, it expires in the future at the latest after one year and 14 days. For so-called “old contracts”, which were concluded between 1. 8.2002 and 10.6.2010, the right of withdrawal no longer applies as previously unlimited. It ends at the latest 3 months after the entry into force of the law on 21.3.2016.
More expertise of intermediaries
Real estate loan brokers must in the future lead a certificate of competence, register and take out a professional indemnity insurance. The Federal Government is now also introducing the independent fee consultant for real estate loans. He must base his advice on a sufficient overview of the market and only receive his compensation from the customer who commissions him.
More protection with high disbursement rates
In case of permanent or significant overdraft of accounts institutions must offer advice on cheaper alternatives. This occurs when the customer consistently utilizes the overdraft overdraft framework for 6 months, averaging 75%. Or, on a tolerated overdraft over 3 months, he overdraws his account on average by more than 50% of the monthly cash receipt.
The consultation must take place in a personal conversation – possibly also by telephone. The place and time of the conversation must be documented. The offer must be repeated as soon as the conditions specified are met again. In addition, institutions must clearly disclose the amount of interest on the credit line on their website.