Eurohypothec: Drafting a Common Mortgage for Europe

Abstract

The virtual lack of cross-border mortgage lending in the European Union (E.U.), even before the current mortgage and financial crisis, reveals the need to adopt a pan-European mortgage instrument. This article shows how it can be structured such that a common mortgage instrument for Europe could lead to the construction of a true pan-European cross-border mortgage market. It is the so-called Eurohypothec. The model is studied following the objectives pursued by the E.U. White Paper about the integration of the E.U. mortgage credit markets and also taking into account the causes of the current mortgage and financial crisis (mainly weak legal structures of mortgage securitization processes and their control, in addition to the lack of transparency in mortgage lending). The paper also shows how operations using or based on mortgage loans can be done efficiently, securely, and transparently throughout Europe through the so-called Eurotrust. In conclusion, the writer finds out that the combination of Eurohypot...