EU considers sub-prime mortgage shake-up

It seems that the European Union could be about to introduce rules to limit sub-prime mortgage lending in the continent.

Previously, it was thought that the EU's proposals on the issue - due to be published on December 12th - would focus on non-regulatory reform of the mortgage market.

However, Reuters has now seen a leaked draft of the document and has reported that commissioner Charlie McCreevy intends to propose mandatory shake-up of mortgage consumer protection.

According to the news agency, the report stated: "The recent developments in sub-prime markets have illustrated the need for transparency in the mortgage funding business, particularly from the end investors' perspective.

"The Commission therefore intends to prepare, in consultation with all stakeholders and in accordance with its better regulation principles, a proposal for a directive which will be preceded by a rigorous cost-benefit assessment."

However, a source at the EU Commission told Reuters that the plans for a directive on sub-prime mortgages could be removed before the document is published.

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