Lying when negotiating your mortgage can be tempting. Presenting yourself as the perfect borrower has surely crossed your mind. The risks you run could cost you dearly!
Your bank's tools
When you apply for a loan, your banker has two sources of information at his disposal to check whether you are really solvent:
- the documents you provide to make up your loan file (pay slips, tax returns, etc.)
- the results of your consultation of the FICP (fichier des incidents de crédits aux particuliers), created by the NEIERTZ law of December 31, 1989.
Whatever the case, your banker is not an investigator with superpowers! He can't check with your employer to see if your pay slips are real. Nor does he have the power to contact other banks to find out whether you have any other outstanding loans. Your banker's only option is to ask you for your bank statements for the last three months, in order to assess your management skills.
The Hamon bill called for the creation of a "positive central file" to record all outstanding loans taken out by private individuals. The aim was to combat overindebtedness and prevent new borrowers from defrauding the banking system by concealing their outstanding loans. The French Constitutional Council ruled that this file infringed privacy and rejected the proposal.
As you will no doubt have understood by now, your relationship with your bank is based on trust!
Characterized payment incident for the FICP
- 2 unpaid monthly installments;
- 1 unpaid installment for + 60 d;
- debt to the bank of + 500 € not repaide for 60 days;
- bank proceedings against borrower for non-payment;
- forfeiture of term for a current loan.
Apprentice forgers please refrain!
If you falsify your bank statements to obtain a loan, the law on forgery will apply. According to article 441-3 of the French Penal Code, the penalty is 3 years' imprisonment and a €45,000 fine. Makes you think! Furthermore, if the forgery involves an administrative document such as an identity card, the penalty is 5 years' imprisonment and a fine of up to €75,000. Not sure it's worth the risk!
If, after granting you the loan, your bank discovers the truth, it can declare a forfeiture of the term. The term is a contractual element of the real estate loan contract that can be called into question by the bank before the agreed settlement date, if the borrower fails to meet his or her obligations. This right is lost, for example, if the borrower no longer pays the instalments due. If the loan is accelerated, the outstanding principal and interest accrued up to the date of notification become immediately due and payable.
GOOD TO KNOW
In a ruling handed down on January 9, 2019, the French Supreme Court confirmed that a clause requiring immediate repayment of the entire loan is not illegal. The lies or omissions must concern "essential information, necessary for the decision to grant credit". In this case, the borrower had falsified his tax documents. He sued the bank, claiming that it had been negligent in its investigations. The court ruled that the bank was perfectly entitled to include such a clause in its contracts and to require its application.
Health questionnaire: no misrepresentation
The French Insurance Code is equally intransigent in this area. Borrowers may be tempted to lie when answering the health questionnaire required to obtain a loan. While bad faith may not always be demonstrated, a simple omission or misinterpretation can have serious consequences. In the case of intentional misrepresentation, the insurance contract will be null and void (with consequences for the loan contract). If it's unintentional, compensation in the event of a claim will be only partial. Honesty remains the best technique for obtaining a loan.
Stéphanie Swiklinski