The Conveyancing Association comments on the introduction of the Mortgage Credit Directive (MCD)

Eddie Goldsmith, Chairman of The Conveyancing Association, said:

“The introduction of the MCD brings with it a number of changes not least the full statutory regulation of second-charge mortgages plus the introduction of the new ‘consumer buy-to-let’ definition. Alongside these fundamental amendments, there are some significant changes for conveyancing firms to be crystal clear on including the new requirement for lenders to provide their customers with a ‘reflection period’ which must last a minimum of seven days and begins when the lender issues its binding Offer of Loan. To complicate matters, customers are allowed to waive their reflection period and lenders are approaching this in different ways – some are considering the submission of the Certificate of Title sufficient waiver of any outstanding period of reflection, while others will require a formal acceptance – despite the fact that the CA’s own preference was for the former rather than the latter.

“This does mean that conveyancers will need to, for example, update their mortgage checklist to record whether a formal acceptance is required, update estate agents and referrers so they are aware there may be delays if a required formal acceptance is not returned promptly, and update their mortgage report to advise the client of the reflection period and how they can waive it if they wish to. CA members have already been issued with the type of draft wording which can be included in their mortgage report to reflect these changes.

“All in all, for the ‘mortgage world’ and its stakeholders the MCD brings with it significant change and the need to ensure systems and processes are compliant with the new rules. It is therefore important that the conveyancing profession is up to speed with these new developments, firms are working with the right information, are clear on how others will be approaching MCD, and have the necessary checks and balances in place to ensure a smooth transition.”