To ensure that the borrower will repay all of his credit, the bank is of course surrounded by a number of precautions. It thus requires the borrower to take out insurance covering the risk of disability and death. And sometimes asks him to also insure the risk of job loss. But this is not enough.
A security often imposed by the banker
The bank must be certain, in the event of unpaid debts not covered by insurance, that it will be able to recover the amount of its claim. To do this, it will inscribe a security – in legalese – on the property financed by the loan.
There are three types of security: mortgages, bonds and, although more exceptionally, the pledge of a sum of money (see box, page 55).
Whatever the formula adopted, the guarantee must be set out in the credit offer, together with an assessment of its cost (Article L. 312-8 of the Consumer Code). If it can be determined prior to the conclusion of the definitive loan agreement, this cost must also be included in the calculation of the overall effective rate.
In practice, the borrower rarely has the power to influence the choice of the bank, for the benefit of which will play the security she chooses to take to guarantee repayment of the loan. First, because financial advisors give little information to clients about existing options and impose the guarantee that is most secure for them. Secondly, because the borrower does not always suspect the existence of alternative solutions. But at bottom, it is often the context that prevents him from opting for a guarantee device adapted to his profile: after having convinced the banker to grant him a loan, negotiated the fees down, and eventually obtained to subscribe a life and disability insurance with a competitor, he does not always see the point of looking at the problem of guaranteeing his loan. Or estimates that the costs of the warranty (whatever it may be) remain marginal in relation to the total cost of the purchase. wrongly. According to the guarantee chosen by the bank, the legal consequences, but especially financial, vary for the same borrower: according to its age, its patrimonial objectives and its bank, the difference between the options is sometimes in thousand euros (see page 58).
Two specific devices
The mortgage and the deposit are the formulas most often proposed by the banks.
The mortgage guarantee
The mortgage guarantee is governed by articles 2373 and following of the Civil Code. It is a so-called real security because it relates to one thing, in this case, the building that is the object of the loan. It can only be granted by notarial deed, whose registration and release fees (once the repayment is completed, the mortgage is usually lifted) are always borne by the borrower. If the latter is in default, the fact of having mortgaged the property to the benefit of the lending institution allows the latter to seize it to sell it and thus obtain repayment of its due. The bank benefits from this guarantee for the duration of the loan until one year after the last payment (article 2434 Civil Code). This has the effect of considerably reducing the economic value of the mortgaged property throughout the duration of the registration. Hence the need, in case of sale of housing, to lift this registration. At the expense of the borrower, and with the agreement of the bank (Article 2441 Civil Code), in general a simple formality which is realized by notarial act. If the bank refuses, it must then go through the judicial process by requesting the cancellation of the registration in the high court of conservation where the mortgage was taken (Article 2442 Civil Code).
Two forms of mortgage collateral are used in the context of a home loan: the conventional mortgage (HP) and the registration of a special lender’s lien (IPPD). In practice, the application of one or the other depends on when the loan is granted in relation to the moment of payment of the price. “If all or part of the price is paid for and paid into the act of acquisition by means of the loan, the guarantee may be a lien of a lender of money up to the amount paid in cash. If a part is payable in the future through the loan, it will be secured by a conventional mortgage, “says Pierre-Alain Guilbert, clerk in the notarial office Guilbert et Associés. If the purchase of the property is under the regime of the sale in the future state of completion (Vefa), that is to say on plans, the conventional mortgage is therefore intended to apply. “But if a part of the loan is released at the signing of the act, for example 30% when work has just started, this amount will be guaranteed by a IPPD in the absence of personal contribution, while the balance will the subject of a conventional mortgage, “adds Pierre-Alain Guilbert. note: the land registration tax, due in case of registration of a mortgage, is not levied on the IPPD.
The bond (Article 2288 et seq. Of the Civil Code), unlike the mortgage, is a personal security, insofar as it is assumed by a natural or legal person. By a written act, the surety agrees with the bank to replace the defaulting borrower. In the case of a physical surety, this reimbursement can be guaranteed by means of a mortgage on a property belonging to it. We then talk about mortgage bonds. In this rather marginal physical security system, banks prefer the use of specialized mutual surety companies, born on their own initiative. These organizations operate on the basis of a principle of pooling risks: at the beginning of the loan, the surety company receives a contribution paid by the borrower, calculated according to the amount of the credit granted. The funds thus collected from each borrower who benefits from it then make it possible to offset any outstanding payments. A system that avoids the bank to take a mortgage on the property and saves the borrower, by ricochet, the costs related to this formality. The bond is a unilateral commitment on the part of the company which, with the contribution due by the borrower, will replace the latter in case of default. In practice, the conditions for the application of this commitment are inserted in the loan agreement. If the customer does not pay anymore, the bank will activate the guarantee in payment of the remaining amount. dependent on the mutual guarantee company to then return against the debtor (article 2306 of the Civil Code). In the end, the result is the same for the borrower, who must in all cases settle his debt. In this sense, the guarantee differs from an insurance system, which covers the insured for specific risks, without being required to pay any refund if they occur. However, bonding companies seek above all amicable recovery solutions, the sale of the property intervening as a last resort. It should be noted that some guarantee contracts include a promise of mortgage registration. By this private deed that does not require any notarial formalism, the borrower undertakes to mortgage his property in favor of the surety as soon as the latter so requests. This contractual stipulation is similar to a simple obligation to do, as the case law has consistently asserted. If the borrower does not respect his commitment, the judge can sanction this breach only by awarding damages and interest (CA de Douai, December 14, 1998, Jurisprudence No. 049660). This promise may also be required by the bank. If necessary, the surety becomes the holder by subrogation. The best-known mutual surety company is known as Crédit Logement. However, some lending institutions offer their own surety subsidiary, such as the Crédit Agricole Mutual Insurance Fund (CAMCA) guarantee, sometimes distributed to LCL agencies, Crédit Mutuel, Habitat (CMH) for Crédit Mutuel, or the Saccef, offered in the Caisses d’épargne and Banques Populaires networks. Some administrations may also act as guarantors on behalf of their officials, in the context of partnerships with certain banks.
Fees charged to the borrower
3 Since the mortgage can only be granted in the authentic form – authenticated by a notary – it involves a number of specific fees, some of which are fixed and others calculated on the amount of the loan. Significantly reduced since 2006 (decree of May 16, 2006 published in the OJ of May 18), these costs remain the responsibility of the borrower (see box opposite).
The deposit also entails a fee, the amount of which also depends, again, on the amount of the loan. Bonding companies – just like the banks that distribute their products – do not communicate much on the scales, each applying a weighted calculation grid in the light of its own criteria. Remember, however, that the cost of a mutual guarantee decreases proportionally to the amount of the loan. Distributed by almost the entire banking network, the Crédit Logement (www.creditlogement.fr) guarantee offers an online cost simulator, but does not provide details on how it is calculated.
For a loan of 200 000 euros for example, you have to pay the structure 2 100 euros the day of the conclusion of the loan, amount likely to go down to 1 800 euros for some borrowers under 37 years. This payment makes it possible to increase the mutual guarantee fund (FMG) and takes into account the commission due to the surety company, its billing somehow. In all cases, the organization agrees to repay part of the amount paid at the end of the loan (75% on average of the amount allocated to the FMG, percentage revised downwards if the loss ratio increases). This repayment is usually made through the bank, but can also be paid directly to the borrower if the borrower notifies the borrower at least three months before the full and final repayment of the secured loan. Other mutual guarantee companies, which are often more competitive in terms of tariffs, but also more restrictive in their analysis of files, can be offered to borrowers by certain banks. The Crédit Mutuel Habitat guarantee, which operates globally in the same way as Crédit Logement, is thus cheaper at the start: just over € 1,000 for a loan amount of € 200,000. It is however less generous concerning the repayment granted at the end of the loan, fixed in all cases at 152 euros. For their part, the Saccef and CAMCA guarantees do not offer any repayment at the end of the loan but prove to be an interesting cost. Still on the basis of a loan of 200,000 euros, the Saccef will require the sum of 1,800 euros to find suitable repayment solutions, after four months of consecutive unpaid, or will replace the defaulting borrower in case of default. impossibility of discharging his debt. The guarantee given by the CAMCA, meanwhile, is charged 2,000 euros to intervene once all litigation against the borrower or his heirs have been brought into play.
Choose the guarantee best suited to its heritage objectives
For several years, there has been an increase in the use of bonding: in 2006, more than half of the loans granted were guaranteed in this way (compared to 32% five years earlier). According to statistics from the Observatory of the residential market, the system seems to have taken off at the expense of more marginal guarantees, such as collateral in particular, without really calling into question the spread of the mortgage, which covers about 30% loans for several years. For Philippe Taboret, deputy general manager of the credit broker CAFPI, this rebound in secured loans is simply explained: “The bonding system, including with housing loan, is primarily for the benefit of the banker, because it outsources risk and avoids contentious management that remains quite heavy, “he says. Let us add that banks, all shareholders of Crédit Logement, are therefore interested in the results of the structure, which are relatively good. As evidenced by the loss ratio of 1%, very low considering the amount of funds collected. For the customer, on the other hand, the system is not as profitable as one would like to believe. In fact, Crédit Logement and CMH offer the reimbursement of part of the costs at the end of the loan. “But what will be the value of these sums, not updated, after twenty years?” Asked Philippe Taboret. In any case, some brokers believe that the use of the bond may well continue to progress. Thus Maël Bernier, head of communication at Empruntis: “In a bear market, banks could be led to privilege the bond rather than the mortgage, to avoid having to seize a property that they will then be difficult to sell. This seems to be a consensus, since the bail mechanism is often considered less expensive and less traumatic than a mortgage. Which is true … partially. For if we examine the respective costs of collateral in the light of a comparative simulation (see box above), the reality seems a little more nuanced. It is clear that the bond is often more expensive than the registration of a special lender privilege, but much more economical compared to the costs of a conventional mortgage.
If your loan can be secured by an IPPD, it is less expensive when you want to get through your credit, the guarantee automatically extinguishing without release. On the contrary, in case of early repayment, it is better to have opted for a deposit. The latter is often less expensive when it is offered by a subsidiary of your bank. it’s up to you to ask her to submit your file.
But does the borrower really have a choice of guarantee? Not always. To be in a position of strength, it is still necessary to be eligible, the guarantee of the Housing Credit or possibly that of a subsidiary company of the bank that finances the credit. If necessary, the borrower can use his accounts according to his objectives, and try to convince his banker. +
The collateral, a marginal option
The pledge, a security interest governed by articles 2355 et seq. Of the French Civil Code, takes the form of a written agreement guaranteeing its real estate credit by blocking a sum of money (life insurance, for example) for the benefit of the lender . In the event of a default by the borrower, the bank “may be awarded by the judge, or under the conditions provided for by the agreement, the pledged claim and all the rights attaching thereto” (Article 2365 of the Civil Code). Often used as part of a loan in fine – which allows to pay the interest as and when to repay the capital at the end of the loan – this guarantee is reserved for customers with a large financial wealth.
The borrower saves the costs of a bond or mortgage, while making his capital grow. And the bank has no privileged rights over the financed real estate.
The borrower does not have locked-in funds for the duration of the loan and may be forced to regularly replenish his portfolio if it no longer provides sufficient collateral for the bank due to an ongoing impairment loss. repayment of the loan. According to the latest figures from the Observatory of the Financing of Residential Markets, the share of alternative guarantees to the surety and the mortgage is reduced to a trickle. While they accounted for nearly 21% of loans granted in 2001, they cover only 4.6% in 2006. The collateral is no longer popular with bankers …
Calculate the cost of a mortgage
– The emoluments of the notary, calculated at the rate of 0.3289% including tax of the loan amount plus a fixed amount of 131.062 euros.
– The land registration tax (TPF), calculated at 0.715% of the loan amount, plus any accessories (around 20% of the sum lent). Attention, this tax is not due in case of IPPD (registration of a special privilege of lender of money). When the loan is secured by a lien and a conventional mortgage, the TPF is only due for the portion of the loan that is the subject of the mortgage. note that certain types of loans (PAZ, PTZ, PEL …) are exempt.
– The conservator’s salary, calculated at the rate of 0.05% of the loan amount, plus any accessories.
– Miscellaneous expenses, which include mortgage notes, executory copies, etc., billed by the notary, and variables, amount to about 500 euros on average.
– Release fees, if any, consisting of notary fees (0.164% including tax of the loan amount, plus a fixed amount of € 53.22), the curator’s salary, registration fees of € 25 and miscellaneous expenses, of the order of 300 euros, but which may be higher.