Can a bank be sued for professional negligence by granting a mortgage to a consumer?
Published on :
19/05/2025
19
May
May
05
2025
It is case law that a bank must warn the borrower/consumer about the financial risk resulting from a loan.
A bank must notably warn the consumer about the risk of over-indebtedness that might arise because of the loan.
A debt / income ratio superior to 33 % is deemed unreasonable. This rule is applied with more flexibility for higher income (French standards).
Consequences is the bank is found to be negligent
It is difficult to estimate what are the financial consequences of the absence of warning on the risks of debt resulting from the loan and consequently calculate the damages you could be entitled to.
There are three possible methods to award damages :
Sum equivalent to the total due to the Bank
The judges rarely grant damages using this method anymore because they deem it is “too favorable to the debtor”.
Sums equivalent to the interest, penalties and bank fees you had to pay because of the mortgage
During past years, this method has been largely used by judges. (Cour de cassation, Civ. 1ère, 1er juillet 2010, n°09-16.474).
Other methods of evaluation have been used in recent years.
For instance, in a particular instance, a French court has ruled that if the Mortgagee had been warned of the risk of debt, there is a 5% chance that he would not have subscribed.
Consequently, the Judge granted the mortgagee 5% of the sums due to the bank.
(Cour d’appel de Grenoble, 2 juillet 2013, n°11/01558, Jurisdata 2013-014188). (Cour d’appel d’Aix-en-Provence, 14 juin 2013, n°2013/342, Jurisdata 2013-104975).
To summarize, you must understand that it is unlikely that the judge will order the bank to pay a sum equivalent to the total of the sums you owe it.
To obtain a satisfactory and substantial compensation it is important to provide the Judge with comprehensive prof of all the financial consequences of the inappropriate mortgage (for your property in France but also for the family and property in other countries).
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