Another Promise Not Kept
According to Le Salon Beige, quoting from a post by Anne Kling, Nicolas Sarkozy made the following comments in 2007, when he was campaigning for the presidency:
On mortgage credits:
"French households today have fewer debts than any other nation of Europe. Now, an economy that does not have sufficient debts is an economy that does not believe in the future, that has doubts about its abilities, that is afraid of tomorrow. For this reason I hope to develop mortgage credits for families and to ensure that the State intervenes to guarantee access to credit for sick people. I propose that those whose salaries are modest be permitted to guarantee their loan through the value of their home. (Note: I believe we call this "equity". I'm surprised that the French do not use this method.) We must reform mortgage credits. If mortgages were easier to obtain, banks would focus less on the ability of the person to pay back his loan and more on the value of the property mortgaged. This would benefit directly all those whose revenues fluctuate, such as temporary employees and a great number of independent workers."
There you have the precise description of the subprime process that led to the crisis we all know. Fortunately this promise was not kept...
From this short article we learn that mortgages are not as common in France as they are here. Does this mean that the French pay off the price of their home when they buy it? Or does it mean that they tend to rent rather than buy?
French readers may find the comments interesting. I have to admit I found them a bit confusing. One reader insists that the two systems are completely different because in France a notary public would inform the buyer of the pitfalls, while in the "Anglo-Saxon" method anything goes, and in case of trouble you go to court and a judge decides the matter.
I don't agree. When I bought my house, I was very well informed about everything. Furthermore, before buying I bought a book for potential home buyers explaining the dangers. I also took a course in basic real estate designed especially for those considering buying a house. I knew that my mortgage was "prime", that the interest was fixed, that it was a 30-year mortgage, etc...
What I did NOT know was how hard it would be to find good and reasonable contractors. It is the contractors who maintain your house and make sure it's safe. Unless you happen to be your own electrician or a bricklayer... Friends warned me about the hardships of maintenance, but you have to live through it to believe it.
The photo of Sarkozy looking like a man at the end of his rope is from Le Salon Beige. Obviously a fake, (and a very realistic one), it can be enlarged at the LSB site.