The Mortgage Credit Directive (MCD) lays down rules for creditors, credit intermediaries and appointed sales representatives relating to the residential immovable market. The MCD applies to credit agreements that are secured by a residential mortgage and to credit agreements that have the purpose to acquire or retain property rights in land or in an existing or projected building. The MCD was introduced by the European Union (EU) as implementation of the G20 commitment to establish principles on sound underwriting standards and to improve the conditions for the establishment of an internal market in the area of credit agreements relating to residential immovable property. Furthermore, the Mortgage Credit Directive was designed as a preventive measure to avoid irresponsible lending and borrowing behaviour by market participants in the EU and to avoid a situation similar to what happened in the United States in 2006–2008, where a real estate bubble affected over half of the United States and left many American citizens either homeless or in huge debts.
