Procedures in case of dispute on a mortgage loan

Disputes related to mortgage loans can arise for various reasons: disagreements on contract terms, challenges to interest rates, repayment issues, or disputes over insurance. When a dispute arises, it is essential to know the procedures and remedies available to resolve it effectively and fairly. This article explores the different steps to take in case of a dispute on a mortgage loan and the available resolution options.

Common causes of disputes on a mortgage loan

Disputes on a mortgage loan can stem from several situations:

• Contractual conditions: The borrower may challenge certain clauses of the loan agreement, which they deem abusive or not compliant with legislation.
• Interest rate calculation: Disputes may arise regarding the calculation of the interest rate, especially if the borrower believes that the applied rate is not the one initially agreed upon.
• Borrower's insurance: Conflicts can arise over the terms of the borrower's insurance, particularly concerning covered guarantees or the insurer's refusal to provide coverage.
• Early repayment: The borrower may contest the penalties applied in case of early loan repayment, especially if these were not clearly stated in the contract.
• Unpaid amounts: In case of financial difficulties, the borrower may face payment default, leading to legal actions by the lender.

Amicable procedures

Before resorting to legal proceedings, it is often advisable to try to resolve the dispute amicably. Here are the main options:

• Direct contact with the lender: The first step is to directly contact the bank or credit institution to try to resolve the dispute. An open discussion can often lead to reaching an amicable agreement.
• Bank mediation: If direct discussion does not resolve the dispute, the borrower can seek bank mediation. The mediator is an impartial third party responsible for facilitating dialogue between the parties and proposing compromise solutions. Mediation is free and confidential.
• Over-indebtedness Commission: In case of serious financial difficulties, the borrower can refer to the Over-indebtedness Commission, which can propose debt rescheduling solutions or payment suspensions.

Judicial remedies

If amicable procedures fail, it may be necessary to resort to the courts to settle the dispute. Here are the main judicial options:

• Judge specialized in credit disputes: This judge is competent to handle disputes related to credit contracts, especially disputes concerning abusive clauses, interest rates, and early repayment penalties. They can cancel certain clauses of the contract or revise the loan terms.
• Judicial court: For larger disputes or complex situations, the borrower can bring the case to the judicial court. This court has jurisdiction to rule on disputes regarding mortgage credit, including liability actions against lenders.
• Court of Appeal: In case of disagreement with the decision made by the specialized credit dispute judge or the judicial court, the borrower can appeal the decision. The Court of Appeal will review the case and may confirm, overturn, or amend the initial decision.

Statute of limitations

It is important to note that legal actions related to a mortgage loan are subject to statute of limitations. Generally, the statute of limitations is 5 years from the date of discovery of the problem or the disputed event. After this period, it is no longer possible to take legal action to challenge the contract or loan terms.

Real-life examples

Let's say a borrower discovers that their variable interest rate was calculated incorrectly, resulting in a significant additional cost. After attempting to resolve the issue with their bank without success, they decide to bring the case to the specialized credit dispute judge. The judge reviews the contract and evidence provided, and decides to revise the loan terms in favor of the borrower.

Laws regulating disputes on mortgage loans

Disputes on mortgage loans are regulated by the Consumer Code, the Monetary and Financial Code, as well as jurisprudence. These texts specify the rights and obligations of borrowers and lenders, as well as the procedures to follow in case of a dispute. It is advisable to consult a lawyer specialized in banking law to guide you through the process.

Conclusion

Disputes on mortgage loans can be complex and have significant financial consequences. In case of disagreement with your lender, it is crucial to know the procedures and remedies available to resolve the dispute. Before taking legal action, it is often recommended to try to resolve the conflict amicably, especially through bank mediation. If this is not sufficient, judicial remedies can help you assert your rights and seek redress.