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Proposed Act on Consumer Real Estate Loans

02/2016

In the beginning of February, a draft bill on real estate loans for consumers entered the Parliament for discussion (the "Bill"). Besides the implementation of Directive 2014/17/EU (the "Mortgage Credits Directive), the Bill will also increase the protection of lenders and borrowers alike, as well as encourage creditors to offer such loans to a larger extent.

In particular, the Bill introduces the requirement on lenders to provide consumers with a specific set of pre-contractual information through European Standardised Information Sheet (ESIS). The required data will be tailored to the particular needs of the client.

Further, stricter requirements are to be imposed on creditors when assess the consumer's creditworthiness. In particular, the valuation of residential immovable property related to the granted credit has to be performed by independent appraisers. Credit providers shall have also the obligation to perform their duties in good faith, taking account of the interests of the consumers.

The Bill also deals with the operation and activity of credit intermediaries.

We have provided a detailed overview of the anticipated changes, which you can find here.

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Darina Baltadjieva