Banks make mistakes. Not out of systematic malice, but because mortgage loan contracts are technical documents, often generated by software configured in series. Miscalculated rates, term default declared without following proper procedures, overestimated early repayment fees, poorly framed guarantees: the grounds for dispute exist and are more common than one might think. Here are the five points to check as a priority.
The annual percentage rate (APR) must include all costs related to the loan: interest, application fees, borrower insurance premiums, and guarantee costs. Article L. 314-1 of the Consumer Code mandates this. Any omission distorts the actual rate borne by the borrower.
These errors affect both fixed-rate loans and variable-rate loans. They often arise from forgetting to include group insurance in the calculation or from incorrectly accounting for mortgage guarantee fees. When the inaccuracy exceeds the tolerated decimal, the borrower can take the matter to court and obtain the forfeiture of the right to interest (Article L. 341-34 of the Consumer Code). In practical terms, the contractual rate is replaced by the legal rate. On a loan of 200,000 euros repaid over twenty years, the savings can reach several tens of thousands of euros.
When a borrower stops repaying their installments, the bank can demand immediate repayment of the remaining principal. This is known as the forfeiture of the term. However, this decision follows strict rules.
Article 1225 of the Civil Code requires the sending of a formal notice specifying a deadline for rectification. If the bank skips this step, the forfeiture can be annulled by the judge and the loan contract reinstated. The Court of Cassation has confirmed this requirement several times. This annulment leads to the restoration of the contract: the borrower resumes payment of their normal installments, and the bank must return the amounts collected under the forfeiture.
Beyond the procedure, the amounts claimed after a forfeiture deserve to be verified line by line. Early repayment fees, late interest, collection costs: some statements include amounts that the contract does not provide for, or apply penalties on an incorrect basis.
Becoming a guarantor means agreeing to pay the entire debt if the borrower does not. The risk is real, but the law protects the guarantor in several situations.
First situation: disproportion. If the guaranteed amount was clearly excessive compared to the guarantor's income and assets at the time of signing, the judge may declare the commitment unenforceable (Article 2300 of the Civil Code). The bank will then be unable to claim anything from the guarantor.
Second situation: lack of annual information. The bank is required to inform the guarantor each year about the status of the guaranteed debt, the amount of the principal remaining due, and the interest (Article 2302 of the Civil Code). If it fails to send this information, it loses the right to claim interest accrued since the last information letter. In a long-term guarantee, the amounts at stake can be considerable.
When a borrower repays their loan early, the bank generally charges a fee. This fee is legally capped at six months' interest on the repaid capital at the average loan rate, without exceeding 3% of the remaining capital before repayment (Article L. 313-47 of the Consumer Code). However, some institutions apply higher amounts based on contractual clauses that do not comply with these caps. Checking the calculation before paying helps avoid losing several thousand euros.
Challenging a banking error involves checking the terms of the contract, reconstructing the history of payments, and understanding the applicable case law. It is a technical task that requires cross-referencing the initial contract, any amendments, amortization schedules, and account statements. Consulting a banking law attorney helps determine if the case has irregularities and assess the chances of success in legal action.
Then there is the question of the time limit. The statute of limitations is five years from the discovery of the error (Article 2224 of the Civil Code). Beyond that, the action is inadmissible, regardless of the severity of the identified irregularity. Borrowers who discover an issue in their contract or in their bank's accounting should not wait.
Author Audrey on 09 February 2023
Economy and Finance : Credit
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