Credit Immobilier de France – Poor Lending Practice

In 2012 the French government agreed to rescue Crédit Immobilier de France (CIF), after conceding defeat in attempts to find a buyer for the struggling mortgage provider. According to an Irish Times report at that time, it had been up for sale for a number of months, but its fate appeared to be sealed when Moody’s cut its credit rating, saying it was in effect locked out of capital markets.

According to a Moody’s Investor Services report in June 2016:

CIF has been in run-off since 2012 when the French government provided state guarantees on its debt to stave off a default due to a liquidity squeeze. The European Commission approved an orderly resolution plan in November 2013, and the group has been implementing it since then.

The portfolio’s quality deteriorated in the late 2000s when the bank expanded its portfolio via third-party business providers that applied weaker underwriting standards.

We believe that the largest part of the risk pertaining to these poorly originated loans is now identified and adequately provisioned for. We positively note that CIF’s portfolio shows early signs of stabilisation as shown by the relatively limited increase in the amount of outstanding problem loans between 2014 and 2015. The group has discontinued its lending activities since 2013, and given that defaults on residential loans tend to peak in the first two to three years from origination and drop as the vintages mature, we expect that the volume of new problem loan formation will subside.

Sounds like Anglo…

We have already written here on the apparent shameful behaviour of CIF and the court cases in relation to the Apollonia scandal and claims that consumers were deliberately indebted.

According to a report in Oct 2017 on the Apollonia scandal:

CIF, by its near-bankruptcy, will put in great difficulty, if not unemployed nearly 2,500 people. In addition, due to a deviation from its main activity which was – remember – to “facilitate the homeownership of low-income households”, this bank, like many other French brands (BNP – Crédit Agricole – Credit Mutuel – HSBCGEMB – Caisse d’Epargne), have made hundreds of victims.


CIF, a financial institution supposed to devote its activity to “social housing”, has chosen to develop excessively by financing leisure and business real estate, through products that are largely overvalued (from 2 to 4 times the value of the market), so potentially “toxic” and this for 10 years.

We have been contacted by a number of French leaseback owners with mortgages with CIF who are now in default. Some have claimed that the bank have been unresponsive when owners have tried to contact them. Some are facing re-possession. Nearly all are unable to navigate the quagmire.

But of course it’s not solely CIF that were lending in this fashion as the Apollonia defence have compiled a report.

Any owners who feel their French bank has not treated them fairly should submit a complaint via the FIN-NET, the cross-border out-of-court complaints network for financial services. Owners in the UK and other EU countries can find out more about their country’s process at the EU site here.

You can use the FIN-NET form for cross-border financial services complaints.

You can also find information how to use FIN-NET in its consumer guide to settling cross-border financial disputes out of court (pdf).


Mortgage Protection Insurance

Many purchasers of French leaseback properties took out insurance with the French bank. In many cases this was

  • expensive – not competitive and much cheaper to get equivalent insurance quotes in Ireland
  • the documentation was completely in French – contrary to EU law governing such contracts with consumers
  • it proved impossible to cancel the contract and change to a cheaper provider unless the mortgage itself was cancelled, which if you are experiencing payment difficulties (as many owners are), is not much of an option

Yet another way that owners were caught in contracts they did not understand the implications of, were not told, and cannot get out of. In fact many owners are continuing to pay exhorbitant amounts in such insurance.


Unfair Consumer Contracts

Remember, if you have a a loan with a financial institution, you are a consumer of financial services. As a consumer of a financial service you have certain rights. Your rights as a consumer of financial services depend on the contract between you and the financial institution and your contract with the financial institution consists of stated terms and implied terms. Under the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995 and subsequent amendments in 2000 any term that is found to be unfair to the consumer cannot be enforced.

The European Court of Justice have made rulings in relation to unfair contract terms in mortgages. If a legal case is pending against someone, but that someone was mis-sold to and their rights violated under any or both of these EU Directives, then that court case cannot proceed until it is proved that their rights were not violated. The French court must stay their proceedings.




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