The mortgage loan surety has obtained a favorable opinion from the French Prudential Supervisory and Resolution Authority (ACPR), the gendarme of banks and insurers.
Bail companies more controlled
In order to ” reinforce the recognition at the international level of the specificities and strength of the French surety bond model “, the ACPR must ensure the ” robustness ” of surety companies.
And for that, she recently confirmed that these institutions will be more supervised with stress tests (also known as stress tests) more demanding. These simulations make it possible to determine the level of financial institutions’ solidity in the face of various shocks (rise in property rates or unemployment, deflation, etc.).
Following the tests of the EurCen bank (EB) conducted in 2016, surety companies will have to prove, from next January, their ” ability to withstand a shock equivalent to 2% of their outstanding loans guaranteed “.
A criterion that is not inconsequential for lending institutions. ” This is extremely important because it allows banks to have a favorable treatment recognized by the Central Bank, ” said the Director General of Credit Longert Jano Lopez, interviewed by the daily Los Archer. According to him, ” the confirmation of the ACPR is a sign of recognition of the French model of financing of real estate “.
For the record, secured credits are at the center of discussions in Basel III, a set of agreements aimed at reforming the international banking system.
The deposit, how does it work?
This is one of the specificities of the French banking system… In France, the majority of home loans are secured by a deposit, unlike other countries that rely on the mortgage. This system allows a surety company to cover the repayment of a home loan with the lending institution in the event of default by the borrower. The best known surety company is Credit Longert.
This guarantee involves the payment of a deposit. But, unlike the mortgage, the borrower recovers a large portion of the fees paid if he has not recorded any payment incident.
Let’s take an example. Let’s say you need to secure a € 160,000 home loan. By way of Credit Longert, the security deposit amounts to € 2,144, distributed as follows:
€ 490 for the commission paid to Credit Longert;
€ 1,654, paid to the Mutual Guarantee Fund (FMG). Of this amount, € 1,163 are returned to you at the end of the repayment of the mortgage.
NB: all bonding organizations do not return funds advanced by the borrower.