Mortgage Default

i would not worry about it,they would have a lot to pick up if that was the case,

what about all the de faulters in this country,

do not worry about it,put it behind you,

did you try and talk to bank to give you a break in payments,etc

is there rent coming in from man co

Hi Westside

Unless your house in UK is collateral I don't see how they can get any

more out of you. As a French lawyer said to me if I was happy to lose

my investment, then just get on with my life. Easy to say I know.

You are not in a unique situation and there is always support in

numbers

Hi

A relative of mine bought 4 properties in France 5 years ago. The rent received does not cover the mortgages so he is subsidising the mortgages each year as well as paying French taxes and an accountant in France. He has a mortgage with a French bank but also a mortgage with an Irish bank. If he defaults with the French bank, he still has to pay the mortgage with the Irish bank so he is in a dilemma what to do. Any advice.

Thanks

Maria

hi

i was thinking of doing the same,as far as i know they cannot come after you outside of france,

i am in ireland as well,

i would think there is a lot of people in the same boat,

i have 3 places in france,2 great one a disaster,

nemea are the man co of the good ones,never a problem with them

would like to meet up if there is any interest with other people in ireland to help with any issues,

friend speaks french

I have yet to default but it may happen due to the usual circumstances of management company being shut down, no rent received, currently awaiting news as to whether a new company will be able to take over but with a drop in rent (no three year increases as stated at time of purchase), a hefty taxes foncieres annual bill and quarterly maintenance fees (again, no mention of this at time of purchase)...has left me in lots of debt.

I also did not use my Irish home as collateral. My Irish home is in negative equity. I don’t have a car, and I have two maxed out credit cards, no savings and a hefty over-draft that I breach monthly. So, I have no “assets” for the French bank or tax authorities or government to recoup. What happens in that situation? The only asset I can think of is my pension but that is not something I will be able to access for a long time...indeed, can that even be considered as an asset?

For those of you currently going through the default process, please can you keep us informed of any developments, and I wish you the very best outcome that is possible in these circumstances.

Has anybody had to deal with Celelem regards mortgage arrears,originally the mortgage was through UCB but its now Cetelem.
Every letter/document is in french so i have no idea whether the loan is a non-recourse,nor do i understand what they send me.
Its hard to believe i bought a property in a country whose language i do not understand,the sleepless nights are just part of my life now.
This was a pension plan but has turned into a bed nightmare.

BROPH

Hi

I believe they can pursue you outside of France as posted

elsewhere. The questions are, how successful will the

actions be and what can you do to protect your assets?

I am in a similar position, Development incomplete,

management company hasn't paid the rent and as such I am

likely to default on the mortgage. I am trying to find

out what I can do to protect my assets. I also understand

that many french mortgages on buy-to-let are non-recourse

meaning they can only repossess the property and can;t

pursue their loss on your other assets. I can find see

anything on my mortgage offer to this affect so it may

require a lawyer to look at it.

If anybody has any advice or assistance it would be

greatly received as the whole situation has left me

feeling quite ill.

Mutley- did I read you have a website that may provide

some useful information?

Kind regards

hi all

very difficult to get a straight answer from anybody on the default option,developers here in ireland seem to be very good at it,

i would find it hard to believe that they could come after you here,

they will have the property and they can sell that eventually,

they gave you the money and circumstances changed so tough luck on the bank,

there must be lots of people out there who have walked away at this stage,

My understanding is that a French bank can pursue you in Ireland or the UK.

thanks for that,

they could try,but i imagine they would find it difficult,

just like if the banks here try to go after the poles and other non nationals who caught them here

TBox - I can confirm that everything you have said is correct. In my professional capacity I deal with clients in the UK and Ireland who have leaseback properties and I have seen first hand both the banks and the Government seizing funds on account and issuing court orders in the UK and Ireland.

Hi there,

I am also in the same boat. Due to this dreadful

recession I lost 2 businesses and have barely enough to

put food on table. Also the French management company

didn't pay the first years rent so I used all my savings

to keep things going.

Unfortunataly, after seeking to pay a minimum amount to

my french bank they refused so I defaulted on my

mortgage, that was about 10 months back. I have now

received a court order to say that my property will be

repossessed on March 15th 2012 and sold with a reserve

price of 40k, I bought for 126k incl vat! I owe bank

103k but with charges this has increased to 117k!

I really don't know what to do? I read somewhere that if

one offers to pay the bank an amount, they must accept

this (note they were very understanding the first year

when the trouble started with management company and

reduced mortgage payments for me). They have seized my

rents since Sept 2011 and have also frozen my french bank

account.

I would rather pay a minimum amount and see if things

will improve for me in 2012 but I guess unless I get good

advice or a perhaps join a group to put the repossesion

off for this year I will have no choice. Did Mutley say

that his friend was 3 years without paying a mortggae and

still did not have their property repossessed?

Thanks for any help/advice you can give.

hi virgo

sorry to hear about your situation,but unfort there will be more like you and me,

its hard to believe that they will sell it at a reserve price of 40,000,it is surely worth more than that,i am thinking of de faulting as well,i will go to interest only if they will give it to me,but that will only tie me over,til i sell my other place over there,that is mortgaged here on my family home..........a big mistake,

saw another case in the alps where the bank had a place for auction and had the same reserve actually,you had to pay a fee to get in to the auction,never found out what it sold for after,but it was the same development where i sold for 128,000,late last year,

i still think they will not be able to go after us here,i have a friend who de faulted in spain,i would think there is thousands there who have and he has heard nothing in over 18 months,

best of luck whatever you do,but do not let it get to you,your health and family are the most important things in life,read ml duignans book, ex offaly player,and you will feel better,

keep in touch everone...............there is support in numbers

Thanks a mil westside for your kind reply.

Would you mind letting me know who sold your property in

France for you as I might just try them. I have 3 months

to do something but it certainly won't be stress!

Happy New Year to all!

Hi All,

I'm pleased to have come across this thread. I made the decision to default on my French mortgage last year after a nightmare leaseback experience. I bought mine in 2005 so didn't pay too high a price but have had rent income problems since early on that basically cleaned out my savings.

I haven't paid my morgtgage since May. However I still pay the Tax Fonciere - don't know why really, just reckon they might be more leniant when coming after me for the balance due after repossession!

I did A LOT of research when making this decision (one I did not take lightly). Basically, it's very easy for a French bank to get a judgement in Ireland against your assests here for money owed there. The courts here can then impose a judgement mortgage on your property meaning if your property is to be sold, the French bank must be repaid from the proceeds first. This judgement remains on the property for 12 years. During that 12 years, the French bank can enforce the judgement which then becomes an order for sale; basically you are forced to pay them even if that means selling your Irish property.

HOWEVER, I can never imagine it all getting that far. I would fight them so hard; we were basically duped in to buying these 'investments' which were "government backed" - yeah right. Very easy for these management companies to walk away and leave us high and dry without rental income. This left me using all my savings and basically cleaned me out. My weekly income dropped so much now that I could no longer sustain the French mortgage.

I have a friend who works in property law and repossessions in Dublin and has never come across an order for sale from a French leaseback property. Fingers crossed I won't be the first!!

Hello everybody, is there room for another one in the

'Leaseback' fiasco boat. Our lessor, Topotel, has filed

for liquidation so we are faced with no rental income

well into the future while the 'Liquidator' goes through

the painfully slow French Legal system. (already gone

through another process to renegotiate the lease

agreements). So it's time to walk away and leave the keys

of our French dream to the Credit Agricole de Languedoc.

It has now reached epidemic proportions in the leaseback

sector. Our Lessor, Topotel in fairness tried hard to

make a go of it but has failed. I will lose a lot walking

away but I am confident that our family home is safe

under Irish law and paying a mortgage on an overpriced

Residence Tourismo does not make sense any longer. Today

my last €1000 will be taken for this months mortgage and

thereafter I am going to default.

Welcome Dugerna. You confidence will keep you from sinking into this muddy affair. Leasebacks are exactly the sort of scam that made money for banks when things were good for everyone, but things have changed now. There has been one story of bank repossessing a residential home on this site, which seems like a small percentage considering the amount of people affected.

Has anyone any good leaseback stories. Getting worried.

Mine has been performng to date but have started to get strange letters from Pierre et Vacance wanting to change the Rent agreement

Hi,

Thanks for all the posts so far it really does seem that leasebacks are a massive headache for most investors. I would like to know what has been people's experiences after not paying a french mortgage. Has anyone had it repossed and then been chased in the Uk for the remainder of the balance?

Thanks

Paul

Hi all,<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

I was looking at an English translation of our lease with Rhodes Tourisme, and it states the following on page 7 of 7:

Article 12 – Resolutory Clause

Failure to fulfil commitments

It is expressly agreed that in the event of non-performance by the Lessee (i.e. Rhodes Tourisme) of one of these commitments and of non-payment of the rent on one of the due dates, or non-respect of his duties, the GRANTOR shall be lawfully entitled to cancel the present contract.

This cancellation shall occur one month after a formal notice sent by recorded delivery letter or injunction to pay served by a bailiff which has remained unsuccessful, without the need for court action.

Does this therefore mean that we are entitled to cancel our lease using the procedure above? We do not necessarily intend to do this (because this in itself has consequences) but I wanted to know if we had that entitlement? I will have to re-read through the forum to see what the consequences of same would be.

Thanks,

Hi Tuulia

Yes in principle you can force the cancellation of the lease.However I was in this position and the reality is not black and white.

Firstly if you get the lease cancelled you will still have a tourist residence that you cannot live in, that needs to be maintained. If you were able to sell as a classic residence you would be liable to pay back a proportion of the 19.6% TVA you were favoured with when you purchased.

When I was in this boat the other owners did not want to disolve the lease so I had to go with the majority and accept a new company who paid a fraction of the initial income.It would have been impossible for me to act as an individual.

So in summary you have a legal right to cancel but it is not as easy as it seems to benefit from the situation. I'm afraid the dice are loaded against you.

Let us know how you get on. Regards Waggtail

Your lease can say what the hell it likes Tuulia but they won't take any notice of it. My lease said the same thing but it hasn't stopped the thieves that were running the complex, Park & Suites, from not paying us our rent for the past year, walking out leaving the place like a pig-sty (despite the contract saying they have to hand it back 'as new', leaving unpaid gas and water bills totalling €33,000, destroying the air conditioning by using the wrong coolant and generally ruining the place. The attitude of these thieves seems to be ...'so...take us to court'.

Good luck - you're going to need it.

r_cummings41220.8510185185

We have also had a terrible experience with French Leaseback. Dealing with the bank has been impossible! They just will not engage in any discussion to delay or change repayment schedule to take into account lack of, or delayed rent. They will give a payment holiday but when that's done, even when the situation has not improved they will come down heavy.

We have made many enquiries also as to what would happen if they foreclose, repossess and sell at a loss - which is guaranteed, these properties are overpriced and the model simply doesn't work! It's true they can follow you to Ireland but I think a Judge in Ireland would be more sympathetic to the strenuous efforts to negotiate with the banks and their total lack of interest in reaching a compromise - it's either pay the full monthly amount, on time, or default. We feel we have no choice but to walk away from this but we're doing everything we can to show our efforts to come to a mutually acceptable arrangement with the bank.

Another avenue to look at is 'reckless lending' by the bank. We were presented with a complete 'package' - purchase of apartment, management company in situ, mortgage lined up, syndic company etc etc. It can't just be the naive investors to get stung in this mess.

Hi all, I'm also very pleased to have found this forum. My situation is much

the same, sold a package that seemed a no brainer ie 9 years lease back &

mortgage covered. Well no sign of developer/management company (Royal

Polmen, has anyone experienced them?) so no rent and on top of that I lost

my job last June just before mortgage was to commence.

I explained situation to the bank SG, who last October said "we are looking

for a solution". I kept chasing for updates & nothing & now I have defaulted

on 2 months mortgage & they are handing it on to the recovery team!

I am very concerned & stressed that they will come for our home in the UK - I

really could do with some sound/legal advice, has anyone got a contact?

Hi Savo,

I don't have a legal contact who deals with foreign property. I am now ten months in to my default and still just getting monthly letters telling me my payment was rejected. I wish they would just get on with the nasty process of repossession; it appears they don't want another failed leaseback on their books. I would think there are hundreds in similar positions.

Maybe the French will be losing one of the 3 stars on their credit rating as this leaseback fiasco starts to backfire on them!

the most inportant thing is not to stress yourself out about it,let the bank worry about it,they will have bigger problems down the line,they will put a judjement against you in france and may extend it to where you are from,but so what,

it will die with you,

put it behind you as a bad investment and get on with life,

Cheers guys, I really do not want to be stressed like I am right now, but all I

can think of is that the bank (SG in this case) will come for me & make a

charge on my property order the sale of my home - I am not sleeping!

Also, what are you doing about other bills you receive for communal charges

etc....?

Hi,

I am paying the communal charges and I paid tax fonciere in December. I just got the bill for the accountant to lodge my tax return but I don't fancy paying them €300 when I have nothing to declare anyway.

I've given up the sleepless nights; like westside said, let them come after me; I can't imagine the Irish court making us sell our Irish property to fund the French who sold us a complete lie in the first place.

I will post any updates regarding our default - in our case it's CIF. Keep in touch.

Thanks for the support, I thought I was the only idiot to be duped by these

conmen!

So at this moment in time is anyone aware of any charges or repossessions

by any bank?

Sorry to hear that r cummings. What happened next - did you find a new management co to run the building or are you still in limbo? Frightening.

Still in limbo. The court case is this coming Tuesday. Depending on the outcome of that, we have three options.

1. There is a new company that wants to take over but I fear that once they see the sate that Park & Suites have left the place in, they might pull out....and even if they don't, I wouldn't trust any of these 'management companies' as far as I can throw them.

2. A private investor wants to buy the building and run it as a hotel...but he is only interested in buying it if he can buy all 100 odd apartments and I don't think there is much hope of everyone wanting to sell.

3. Another private investor wants to buy the building and will buy apartments from those that want to sell and lease from those that don't want to sell. This would be the best option by far.

I'm just hoping we can get something in place so that I at least have a small chance of selling. I'll sell at a loss just to get rid of it. All in all, leaseback has been a disaster. It will surely go down as one of the greatest scams in history.

r_cummings41224.7763310185

Best of luck with it.

I think we need more than luck my friend. We need a French legal system that supports we landlords against unscrupulous tenants like Park & Suites. At the moment we don't have such a system.

r_cummings41225.215162037

Indeed. Just a couple more questions - how quickly/when did they leave you in the lurch? Did you have any notice? Is the building being used/rented out at all now?

The writing has been on the wall for the past year. They first asked for a rent reduction of 20% and when the owners reluctantly agreed to this and signed new contracts, they then reneged on it and demanded a reduction of 40%. We refused to accept this of course.

Where they xxxed up is that they paid one quarter's rent with a 20% reduction, thus, inadvertently accepting that the new contract (20% reduction) was in force. They then stopped paying the rent, claiming that nothing had been settled which resulted in the owners having to bring legal action against them.

They closed the complex and moved out leaving massive bills for both services and repairs on the 22nd of October. It's been empty ever since.

r_cummings41225.5057407407

Nightmare. Hope you get something sorted soon.

I have been reading the posts here about French banks chasing people in
Ireland after they have handed back the keys of their French property. I
have also read that most French mortgages are non-recourse which means
the individual is not liable after they hand the property back. If this
is the case how can French banks chase the borrower if they had a
non-recourse mortgage?

I never came across this term before; I certainly hope that is the case! However, this article paints a very different picture

http://www.frenchentree.com/french-law/DisplayArticle.asp?ID =45904

Ladies and Gents

I am in the same boat as the rest of you. I have struggled for 2 years to pay the mortgage.Walking away seems the only atractive option.

This Leasback situation started to fail about 3 years ago.

It seems strange to me that in all of the cases of repossession threats by the banks, no one has been summosed to a British/Irish court to be ordered to repay arrears.No one has even had notice that this is going to happen.

To my mind there are two explanations to this:

1. The banks can't or won't ( I hear those that say their bank has told them they will chase them abroad-that is what I would say if I was going to be out of pocket) operate abroad.

2.That the situation is not mature enough for these processes to have happened yet.

I personally think the likes of Barclays would struggle to enforce this in foreign courts.

This article is written by solicitors...it is in their business interest to advocate this line. I'd check out the non-recourse mortgage before I wouldstart crying!

Have a look at the last paragraph on the following web page:

http://www.athenamortgages.com/French_Mortgage/Second_Home_M ortgage_Guide.php

Hiya,

That URL wouldn't work:-(

Irony at its best..... I got a call from my French bank this morning after 12 months of me trying to get them to reply to me! They have hired an English speaking lady (very nice) to try sort out the mortgages in difficulty. So I am very much torn now. I'm ten months in debt but they are fairly determined to find a solution; even offering to re-mortgage over a longer term. They seem to be as desperate as me! They've upset an already depressing Monday!

Back to the drawing board..........

Got on to that website; interesting reading but I find it hard to believe the French offer non-recourse loans; this article seems to be the only one that lends itself to that idea. Google shows up pages of US states where non-recourse is written in to their law.

I am going to trawl through my legal documents from the early days to see if I can find anything.

It is working for me try this again

http://www.athenamortgages.com/French_Mortgage/Second_Home_M ortgage_Guide.php

If not then try

http://www.athenamortgages.com/

Then click on the 'mortgage guide' tab and then on the 'second homes' tab

Details from the leaseback section of the aforementioned website:

Since
the Nineties, when interest rates were last extremely high, the French
mortgage market has been based on long term mortgage deals which offer a
degree of protection for the borrower. It is quite common for a French
resident to fix their mortgage payments for 20 years and to see that
loan through to the end without ever remortgaging. In France, any
variable rate mortgage offers the flexibility to increase the term of
the mortgage to bring down payments, with many banks capping the amount
of the increase in monthly payments to the rate of inflation.

Only in exceptional cases will French banks allow borrowers to take
on a mortgage payment which would increase the amount spent on a monthly
basis, to service all their payments for borrowings past 33% of gross
income. This leaves borrowers with sufficient income to spend, and the
fact that mortgages are either capped or fixed means that the banks are
confident borrowers will not default.

The stability that this responsible lending brings means that 100%
loan-to-value is still achievable from a range of banks, for both
residents of France and non-residents, though other lending criteria may
apply (such as making loans only available to homeowners or those with a
certain level of savings, with minimum income criteria also prevalent).
The bank will take a charge on the prospective property the details of
which will be outlined in the loan offer. The loan will generally be a
non-recourse loan - meaning that in case of default the bank will only
take the property as security and not pursue payment of the debt from
other assets. This is one of the reasons the banks are so strict when
asking for evidence of income and assets.

Thanks JuanAzur; fingers & toes crossed - I am going to check my documentation tonight!

Interesting, I will also be checking my docs. Out of interest, I am with Societe

Generale, which banks are you guys with?

with societe generale,on a capped rate,no degree of optuins with this,

no contribution holiday or skip in payments,no interest only,

i have one other place there to sell and then i will leave this place to them and take mt chances,

keep in touch everbody as its great to read the different views,

I'm with Credit Immobilier de France. I've already had interest only. I'll be trawling the docs tonight to see if there's any mention of non-recourse!

Hi ,

There seems to be widespread default on French Leaseback Mortgages, but how far can and will French Banks pursue defaulters in Ireland or UK. Threats are one thing ,but court orders or seizing UK/Irish Assetts is another?? Do you know of anybody where this has happened?