Survey on real estate foreclosures: how people who are over-debt can escape the trap

 In France, property foreclosures affect 11,000 households annually. It is difficult to escape "a suffering" when the decision is made.Margaret and Claude Hédouin, retired residents of Fatouville-Grestain (Eure), were close to losing their house near the Seine's mouth. It was going to be up for auction. Their conflict lasted seven years.


In February 2014, their 27-year-old son Aurélien made the initial plans to acquire a nightclub in Urou-et-Crennes (Orne). It cannot be supported by any bank.


The nightclub owner suggests to Aurélien that she take out a 150,000-euro seller's loan in order to speed up the sale.


This is a credit conceded straightforwardly between the merchant and the purchaser of a property. It doesn't go through the traditional bank circuit. Aurelia agrees. He has seven years to pay back 1,717 euros per month.


His parents served as joint surety in April 2014, when the document was signed. In addition, they provide him with a loan of 30,000 euros to assist him in starting his business and working on his nightclub.

Aurélien and his parents ask the seller to provide them with the discotheque's accounts before signing the deed of sale to ensure that everything is running smoothly.

Donations from across France Despite everything, the Hédouin family signs the deed of sale because they have faith in the seller. They would find out later that the nightclub was having financial trouble. After one year, the working outcomes are lacking to reimburse the seller credit. Aurélien decides to remain silent to avoid causing his parents any anxiety.


Margaret and Claude Hédouin were confronted by a bailiff in June 2015 to demand payment of 19,000 euros in unpaid debts. The nightclub filed for bankruptcy three months later.


A procedure for the seizure of their home is initiated because they are unable to pay their debt. The court decided that we were dependable and that we ought to have been more cautious," says Margaret Hédouin to Enquêtes d'actu .


Although the couple acknowledges that they were careless and naive, "the notary never informed us of the consequences." You can probably imagine that we would never have signed if we had known that we were putting our home on the line.


On February 6, 2023, their house will be sold at auction for just 50,000 euros.


The Hédouin couple's final and only hope of preserving their home is this: to put an end to the process, quickly collect 158,000 euros. The Eurois couple receives donations from across France as a result of the story's media coverage.


"A cat was even set up by someone. We were extremely moved. Margaret Hédouin recalls, "We received hundreds of messages and phone calls to support us."

The couple finally got their money back on Saturday, February 4, 2023, at 5:30 p.m., just two days before the auction. The Norman couple states, "Our house would have been sold at auction if we had not found this sum before February 5 and we would have had 60 days to leave it."


“Creditors don't necessarily have an interest in selling at auction;" "We must not be an ostrich." Maître Michel Draillard says, "They want to be paid." This legal advisor, individual from the Relationship of Attorneys and Professionals of Strategies and Implementation (aappe), makes sense of that abandonment "is the main method of authorization that functions admirably, on the grounds that individuals who actually have cash on their financial balances don't hold on to be seized to pay".

According to Maître Béatrice L'Hommeau-Grignard, a lawyer in Eure, "the bank usually decides to seize real estate when there is a forfeiture of the term." At the point when an individual doesn't pay for a specific number of months, for the most part somewhere in the range of six and eight months, doesn't give news, doesn't move toward his bank to say that he is having issues.

If a borrower fails to pay his installments despite formal notices, a bank can take the action of extending the term.


"One should not hide in the sand from the first difficulties of payment," according to this Bourg-Achard and Rouen (Seine-Maritime) jurist.


Contacting your bank as soon as bills go unpaid is necessary in order to "above all not to remain idle." It can postpone the unpaid installments at the loan's end or suspend the loan for several months. The process is halted if your debt isn't too high and your family is willing to lend you money. "It's difficult to stop the sale of the property if you don't have this solution and the debt is too high," Maître Béatrice L'Hommeau-Grignard says.


"The creditor must remain proportional in the measures it implements," generally speaking. Equity decides proportionality. The legal director of the National Chamber of Commissioners of Justice, Cédric Kieffer, asserts, "We are not going to implement a foreclosure for a debt of a small amount."

"A gleaming Mercedes," but no money for the cafeteria. Anyone can go through the foreclosure process. Ace Michel Draillard specifies a few cases that can enact the component of horrible:


“If you fail to pay your condominium fees, the syndicate will begin legal action to collect them, and if the other, more conventional means of execution fail, it can sell your apartment at auction with this judgment; you need to settle charges, you have an expense change, the duty office tells you of a change and, after the foundation of the enforceable title and without other chance, can have your property sold (seizures are anyway uncommon, on the grounds that the State , like most banks, looks at this if all else fails and the circumstance of citizens sincerely is frequently inspected thoughtfully); If you don't have insurance and owe money to the victim, he will try to get paid any way he can, especially by selling.


“Contrary to what one might think, the risk of foreclosure does not necessarily concern people with low incomes,” as Maître Béatrice L'Hommeau-Grignard points out.


The majority of couples who are over-debted are those who have suffered a life-altering accident (divorce, illness, etc.). which results in a decrease in income. There are likewise the individuals who spend more than they procure, who are "disengaged", as expert Michel Draillard brings up: " I know people in Cannes who had a shiny Mercedes but claimed they couldn't afford to pay for their kids' canteen.

Regardless of the circumstances, those who are unable to escape are entangled. They haven't been able to find a solution because of the difficult past. The banks made an amicable attempt before sending us the file, so it's the end of the world. Additionally, creditors' attorney Maître Jean-Michel Hocquard sends a registered letter as the procedure arrives on his desk. Before the orientation hearing before the judge, there is no response in 90% of cases.

The Ministry of Justice recorded 10,724 foreclosure procedures in 2021, indicating "a constant decline in procedures." Comparatively, this is down 33% from 2016. According to the ministry's statement to Enquêtes d'actu, the "relatively large drop" that occurred between 2019 and 2020 "can be explained, in part, by the global pandemic linked to Covid-19, but it should nevertheless be noted that this procedure has been in constant decline for a few years."

The phony good idea, the sale for repurchase?

For the 11,000 or so families that end up on account of the Hédouin family, the "arrangement" of the deal with repurchase is immediately proposed to them. The repurchase is the opportunity for a property owner to sell his or her home while maintaining occupancy for up to five years. In return for an inhabitance remittance , the dealer benefits during this period from a select and unavoidable right of recovery, at a cost characterized toward the beginning of the activity. We can talk about a temporary sale, "states the market leader, Immo safe.


"A solution known as repurchase has been around since the Middle Ages. It is a tool for preserving heritage. “A way to circumvent the banking system when the banks no longer follow you,” Immo safe's commercial director Jean Valade tells Enquêtes d'actu. Since Jean Valade's company handles approximately 150 files annually, the market appears to be buoyant despite the decline in procedures in recent years. We get a call from a client every week," states this executive.


Immo Safe contacted the Hédouin family to help them pay off their debt and get their house back.

The individual initially offered to purchase our home for 420,000 euros. We were required to pay a 24-month occupancy allowance of 4,200 euros if we accepted. After that, if we had the money, we bought a house.


But a few weeks later, Immo Safe contacted Margaret and Claude once more to inform them that the investor was no longer offering 420,000 euros for the purchase of the house; rather, the investor was now offering 260,000 euros with an occupancy allowance of 2,400 euros per month. for an entire year


The Hédouin couple turned down the proposal from Immo safe. Regardless of whether the 260,000 euros would have made it conceivable to eradicate their obligation, the couple couldn't have ever had the monetary means to pay the inhabitance remittance for a considerable length of time, not to mention the resources to repurchase their home year and a half later. , despite paying 260,000 euros.


This method of redemption is not recommended by any of the professionals consulted. Although it is presented as an excellent solution, it is still a costly financial undertaking overall. I had clients who were in debt but couldn't pay it back, even though they earned about 6,000 euros per month. Maître Béatrice Lhommeau-Grignard warns that it was too expensive.


Loan bosses' legal advisor Jean-Michel Hocquard could do without the standard particularly by the same token: " Since it is legal, it is not a con, but rather an illusion. According to common usage, this is a falsely beneficial solution. It lets you breathe, but after a year, they come back, and you have to sell them for very little.


The clauses are written in such a way that nothing is done to prevent the debtor from ever repaying. Michel Draillard, a coworker from Cannes, issues a disclaimer. "The property ends up being sold for less than half of its value."


Precautions to be taken because, according to Normandy lawyer Maître Béatrice Lhommeau-Grignard, "the sale with repurchase can be interesting for those who have sufficient income, do not have too much debt, and who have the certainty in the short term of "have an improvement in their financial situation."


When typing saves money, there is only one way to stop a foreclosure: pay. The debtor can decide on an amicable sale if he does not have the money right away. According to attorney Béatrice L'Hommeau-Grignard, "you have the right to sell your house to prevent it from being seized, provided that the sale price covers the amount of debt that is owed." Surprisingly, however, going to the auction is sometimes preferable to negotiating amicably!


"The standing of closeouts is that it is "disastrous". Except in major cities like Paris, the inner suburbs, and the center of major cities, this holds true in 80% of cases. There is no discount in the heart of Montpellier, Toulouse, or Bordeaux's real estate markets, as master Hocquard explains.


This Parisian legal advisor knows completely well that in the capital, "we sell similarly too at closeout, while possibly worse": " I sold a condo in a socially possessed working in Paris. The management group was speechless because the apartment sold for the local market price, whereas a social housing apartment that sold for 180,000 euros five years earlier went for 450,000 euros. Therefore, the unfortunate individual left with a balance of 100,000 euros. It is not insignificant. It happens quite frequently in Paris.