Unlike in France, Americans seldom go to court to settle their mortgage defaults. Instead, private consulting companies and real estate agencies offer management assistance to homeowners in the “pre-foreclosure” period, the weeks preceding seizure, acting as liaisons between potential buyers and sellers forced into immediate liquidation.

Such scenarios are rare in France where the Ministry of Justice recorded only 13,568 court foreclosure proceedings in 2005, the last year for which any statistics are available, but a statistic that is still relatively close to what French economists tally for 2006 or 2007, according to Jean-Pierre Robin, economic journalist for Le Figaro.

Last year, French reforms regarding the repossession of properties were passed to increase the creditors’ protection as well as giving debtors additional options when faced with financial hardship, reported Mr Robin, allowing an owner four months to sell his/her property before any seizure procedures can begin.

The principal difference between the US and France, however, is the process that takes place before a mortgage is granted. “American bankers grant loans based on the value and solvency of the property, whereas their French counterparts base the loan on the financial credibility of the borrower,” stated Mr Robin in his Figaro article.

He continues to suggest that American mortgage institutions do not particularly care if their clients end up in financial dire straits because the bank will always have the right to repossess the property; whereas, in France, he asserts, “financial institutions are highly concerned with the solvency of every contract made and multiple precautions are taken to avoid all possible future situations of insolvency.” The US lender is therefore considered negligent by French standards, he contends, for their failure to extensively access the real cash flow of borrowers.

In France one is obliged to present extensive documents that provide proof of income as well as disclosures of all debt. A borrower’s monthly mortgage payments cannot exceed 33% of his or her income. A life insurance policy that will cover payments in case of unemployment or death is a mandatory part of a French mortgage, a requirement that is sometimes very costly depending on the loan.

As a result of these precautions, the ratio of property seizures for default of loan payments in France to the USA is 1:25, based on an equal population scale. The down side of this scenario is that too often, only those who are well-off financially are given the opportunity to buy property in France. Only 56% of French residents own their homes compared to 70% in America.

The conventional mortgage term in France is 15 years although 20, 25 and 30-year mortgages are available. In 2005, the first 35-year term home loans were introduced and now two banks are even marketing 50-year term mortgages. From 2002 – 2006, the average length of a mortgage in France grew from 15 to 18 years.

Legislation in 2005 requires mortgage brokers to have professional indemnity insurance and be registered with each bank and provider that they represent. A good broker will liaise directly with the lender, foresee and prevent problems and guide one through the procedure. Since they receive their commission directly from the bank or lender, most brokers will not charge fees for their services.