We agree with the proposed Guidelines, which are mainly already common practice at DB. We believe it is very important to have clear, practical guidelines in place for the assessment process. Once signed, a mortgage contract will be binding for banks for up to 40 years.
In addition, we have comments on two issues: Documentation and retention of information (GL 2) and assessment of the consumer’s ability to meet his/her obligations under the credit agreement (GL 4):
a) Documentation and retention of information (GL 2):
All documentation for the process leading up to the credit agreement, the agreement itself and all the follow-up exchanges are scanned and stored electronically. We assume that secure electronic filing in a durable medium fulfils these standards.
b) Assessment of the consumer’s ability to meet his/her obligations under the credit agreement / loan term extending past retirement age (para 4.4):
The customer’s likely entering into retirement age is a regular part of the credit approval process. Whilst making every effort to obtain documentation on likely retirement income from the customer (e.g. the German Statutory Pension Insurance Scheme’s annual statement of likely monthly payments), some borrowers are not able to present a full total of their statutory, private and occupational pension insurance entitlements (for example, in the case of self-employed people). In any case, even if all the documentation is available, they can only provide an estimate based on current law and economic conditions. We therefore interpret this guideline as saying that the bank should use appropriate standard calculations deriving from the customer’s employment history and income statements, which – if possible – will be supported by pension scheme documentation.
We believe that the Draft Guidelines are complete and have no additional suggestions.