Simpler and more flexible than the mortgage, the bond of the mortgage is winning the heart of the French. But how does the device work? Lighting.
The conclusion is clear. The French who borrow to buy real estate are addicted to bonding the bank loan. In its latest report on housing finance, the Banque de France’s Prudential and Prudential Supervisory Authority (PCA) indicates that 58.3% of the loans contracted in 2016had the objective of a bond. Real guarantees, such as mortgages, are down sharply. ” The guarantees given by a credit institution (or more exactly a finance company) are issued mainly by Crédit Logement, which covers – in varying proportions – all the banks in the sample, and CM-CIC Bail Habitat, guarantor of Crédit Mutuel Group
“, adds the ACPR.The security deposit has a cost, estimated at 2% of the amount of the mortgage.
What is the use of the bank guarantee?
Unlike the mortgage, the advantage of the bond or loan guarantee is that it is not attached to the property for which the borrower has applied for the loan. ” If the secured loan can be transferred to a new acquisition, subject to prior agreement from the bank that originally granted the loan and with the confirmation, by Credit Logement, of the maintenance of its guarantee “, states the Housing loan. The system also requires few formalities since it materializes by a private deed, thus allowing a quick release of the loan.
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Finally, in case of default on the part of the buyer, the bonding agency is mobilized to support it: ” In case of financial difficulties, (…) all the amicable solutions are analyzed: postponement of deadlines, new schedule of repayment, extension of the loan term, … If the normal management of the loan is not possible, Crédit Logement accompanies the client in the sale of his property, offering him an expertise that will allow him to sell his property himself and this at market value. It is only if no amicable solution, Crédit Logement commitment from the borrower of the shares of judicial recovery of amounts due. “
A rehabilitated device
If today the surety bond is acclaimed by all, this has not always been the case. In 2014 and 2015 , Crédit Logement, for example, was severely attacked by the consumer protection association UFC Que Choisir? The latter criticized the opacity of the bonding system put in place by an organization largely owned by banks (BNP Paribas, Crédit Agricole, LCL, Société Générale, etc.).
Faithful of the association had even raised costs of treatment “extravagant” near UFC. The case went even before the Competition Authority which will end, in an opinion, by rehabilitated the surety bank. However, it specified that the Crédit Logement company should make efforts in terms of transparency on its pricing schedules and clearly state the reports it maintains with the banks on which it depends to customers.