The free choice of borrower insurance!
The MURCEF (Urgent Measures of Economic and Financial Reforms) Act has already been denouncing since the end of 2001 that a bank is systematically trying to link a loan it grants to a borrower, to a mortgage loan insurance that it markets to itself. even. Unfortunately until now, this association was in place and imposed by the banks and this was very often the condition to be granted a credit.
The Legarda law says stop this use considered abusive by allowing the competition to position itself and offer offers to future borrowers. Thus, the future borrower can now look for loan insurance that will allow him to obtain the best guarantees at the best price before contracting his loan and do what is called a delegation of insurance.
If the bank refuses to accept this insurance to which the borrower has subscribed on his side, it must make a written to the borrower, stating clearly why this insurance is refused.
What does the Legarda law change for the future borrower?
For a loan contracted by borrowers with a profile presenting no particular risk, the Legarda law now allows them to subscribe to the insurance of their choice through the delegation of insurance and to play the competition, without necessarily having to subscribe to the assurance that the lending institution offers them. Provided however that the level of guarantee offered by this insurance is equivalent to the level of guarantee offered by the insurance of the body that grants the credit.
For a loan contracted by borrowers with an aggravated health risk, or an aggravated sports risk, the Legarda law does not change much because the banks do not provide this type of profile. These borrowers must already have resorted for years to insurance delegations via independent insurance companies to insure their loan.
The Legarda law imposed obligations and rules for loan insurance
Since July 1, 2009, when the borrower goes to see his bank to make a credit, the latter must provide him with a standardized information sheet relating to the guarantees they require for loan insurance.
When subscribing to a mortgage, the bank that finances the project will no longer be able to “refuse as collateral another insurance contract when this contract presents a level of guarantee equivalent to the group insurance contract (= the one of the bank granting the loan) “.
In case of refusal by the lending institution in front of the individual insurance presented by a future borrower, the bank must then mention to the latter in writing, the reasons for its refusal.
Finally, the Legarda law specifies that “the lender may not modify the loan rate conditions provided for in the offer […], whether fixed or variable, in consideration for its acceptance as security for a loan. insurance contract other than the group insurance contract he proposes “. In other words, this means that the bank will not be able to offer a more advantageous credit rate to a borrower if the borrower subscribes to his group insurance.