EU Credit Initiatives

The proposed Directive for Credit Purchasers, Servicers, and Recovery of Collateral seeks changes to the regulatory framework for secondary markets trading of non-performing loans (NPL) and performing loans (PL). MFA encourages EU policy officials to narrow the scope to just NPLs. Secondary markets for PLs are functioning well and proposed changes would impair liquidity. Also, MFA cautions against requiring asset managers to register as servicers. While some managers may wish to service the loans directly (and in that case they should be licensed as a servicer), most prefer to outsource loan servicing to licensed and regulated specialists. MFA also suggests amending the credit purchaser reporting requirements so that the reporting obligation falls on the administrator of the loan, rather than the purchaser.