Professional Practice Updates - January 2016

We would like to draw members’ attention to an amendment to the Council of Mortgage Lenders’ (CML) Handbook, which is due to be published in the online version of the Handbook on 1 February 2016.

The reason for the change is to incorporate the concepts of binding offers and reflection period, introduced by the Mortgage Credit Directive (Mortgage Credit Directive Order 2015), which comes into force on 21 March 2016. The Directive follows upon DIRECTIVE 2014/17/EU of the EUROPEAN PARLIAMENT.

The change to the Handbook has been explained by the CML as follows:

‘Summary of proposed change

Additional wording in clause 10.2 to reflect the mortgage credit directive and concepts of binding offer and reflection period. The wording allows for the conduct of the borrowers agent (in this case, the conveyancer) to act as the acceptance of the mortgage offer on the borrowers behalf, by submitting a Certificate of Title (COT) to the lender. This will allow the lender, in the case where the lender does not require the borrower to formally accept the mortgage offer, to have evidence of the acceptance by virtue of the COT being submitted; it also indicates that the borrower has bought the reflection period to an end.

This change is in conjunction with clear explanations in customer literature about accepting the offer and the reflection period; and a proposed change in the Approved Certificate of Title for E&W which reflects the wording in the Handbook.

Jurisdiction

England & Wales; Scotland

Location in Handbook

Clause 10

Revised wording (change in bold)

10.2 We shall treat the submission by you of the certificate of title as confirmation that the borrower has chosen to proceed with our mortgage offer and as a request for us to release the mortgage advance to you. Check part 2 to see if the mortgage advance will be paid electronically or by cheque and the minimum number of days notice we require.

Previous wording

10.2 We shall treat the submission by you of the certificate of title as a request for us to release the mortgage advance to you. Check part 2 to see if the mortgage advance will be paid electronically or by cheque and the minimum number of days notice we require.’

There will also be a change on 1 February 2016 to Clause 5.3 of the CML Handbook relating to searches and enquiries. The final wording of the amendment has yet to be agreed. Further details on this will follow as soon as they are available.