“Home Loan Difficulties without Health Questionnaire: Understanding Lemoine Law 2023”

Home loan: difficult to borrow without a health questionnaire in 2023

Coming into force on June 1, 2022, the Lemoine law has given a lot of hope to loan applicants discriminated against because of illness or former illness. The new regulations broaden the right to be forgotten and remove the health questionnaire under certain conditions, but feedback from the field shows ignition failures. Here are the edifying results of the survey conducted by the magazine 60 Millions de consommateurs. Lemoine law: inclusive measures for borrowers Before addressing the difficulties encountered by some borrowers to benefit from the Lemoine law, let us recall the two key measures it contains: The reduction of the period of the right to be forgotten: people cured of cancer do not have to declare their former illness in the mortgage insurance health questionnaire, after a period of 5 years instead of 10 previously. This right has been extended to viral hepatitis C. The end of medical selection: for insured portions of less than €200,000 reimbursed before the borrower turns 60, the health questionnaire is abolished. The insurer no longer has the right to seek any data relating to the client’s health. The third measure and not the least is the possibility of changing mortgage insurance at any time, it was even the primary intention of the Lemoine law. Since September 1, 2022, any borrower can terminate their mortgage credit insurance whenever they wish, the day after signing the loan offer, to replace it with a cheaper offer with equivalent guarantees. Removal of the health questionnaire: the law misinterpreted The magazine 60 Millions de consommateurs has collected testimonials from borrowers who consider themselves entitled to benefit from the Lemoine law, but who are victims of obstacles to its application. According to the Séropotes association, some brokers are misinformed, telling their customers that they have to wait for the implementing decree. The Lemoine law was promulgated on February 28, 2022 and entered into force on June 1, 2022, no decree is expected. Age limit at the end of the loan Problem also on the end date of the loan. The RoseUp association which accompanies cancer patients, and in particular women victims of breast cancer, indicates that a person was refused insurance without a health questionnaire on the pretext that if he asked for the suspension of monthly payments of the loan, the 60-year limit would be exceeded. The law is clear: “the maturity of repayment of the contracted loan is prior to the sixtieth birthday of the insured”. It is the end of loan date set at the signing of the offer that is authentic. Maximum amount To access home loan insurance without a health questionnaire, “The insured portion of the cumulative outstanding balance of credit contracts does not exceed €200,000 per insured”. Article 10 of the Lemoine law may be subject to extrapolation, as it lacks clarity. The nature of outstandings is not defined: does it include consumer loans? Some insurers include this type of credit in the cumulative outstanding amount, which can exceed the €200,000 ceiling and prevent the person from accessing insurance without a health questionnaire. However, Article 10 refers to Article L.313-1 of the Consumer Code which concerns credit agreements intended for the financing of buildings for residential use or mixed use (residential and professional). Quota Banks and insurers can also play on the loan insurance quota, ie the part insured by each in the event of a joint loan. Access to insurance without a health questionnaire is possible if the portion insured per borrower does not exceed €200,000; in theory, a couple who borrows €400,000 (with a term before their 60th birthday) can escape medical selection if the quota is 50% on each head. Unfortunately, the bank is sovereign in matters of guarantees and quota, and can thus impose a quota beyond 100% of the sum borrowed, which obliges the candidates to have to fill in the famous discriminating questionnaire. Higher rates without a health questionnaire Another denounced side effect is the fact of offering insurance with a health questionnaire to benefit from more advantageous rates, when the person is eligible for the device which makes it possible to avoid medical selection. The insurer can thus detect a person with health risks and then present an increased estimate, but without medical selection. The “optional” health questionnaire is by no means an option; as soon as the borrower respects the conditions, he immediately accesses the insurance without a health questionnaire. One thing is certain, home loan insurance contracts without a health questionnaire are more expensive than others due to the pooling of risks. This is more true with alternative insurers who have less information about their customers than banks. The latter have indeed a spy, the bank account, which reveals the daily allowances of the Health Insurance in the event of work stoppage. To prevent a high loss rate, competing insurers are increasing their prices by an average of 20%. Young and healthy borrowers have every interest in increasing the insurable portion to benefit from adjusted rates. Beware of warranty exclusions While bank insurers have chosen not to modify their prices with the entry into the running of the Lemoine law, some are skimping on guarantees by excluding non-objectifiable diseases (MNO), such as La Banque Postale-CNP which is boasted of freezing its prices but which excludes back pathologies (herniated disc, low back pain, neck pain, sciatica, etc.). In the event of work stoppage linked to a pre-existing condition at the time of signature, the borrower is not covered. For Arnaud Chneiweiss, insurance mediator, there is nothing illegal, “the insurer is free to ask exclusions of guarantees”. For the French federation of diabetics, this practice “empties the law of its substance”. It should be remembered, however, that most contracts exclude MNOs (dorso-vertebral conditions, psychological and psychiatric pathologies), but that the exclusion buy-back option is often offered in return for an additional borrower insurance premium. Deputy Patricia Lemoine, at the initiative of the law that bears her name, expected possible side effects, and the facts prove her right. The Senate introduced the removal of the health questionnaire without an impact study. The law had to be validated before the end of the previous legislature. If only sick or formerly sick people have access to insurance without a health questionnaire, the principle of pooling loses its interest, and price drifts are to be feared. However, one of the objectives of the law was to make borrower insurance more inclusive. An assessment of the application of the Lemoine law by the Financial Sector Advisory Committee is expected for 2024; she will say if corrections are necessary. Some patient associations are already calling for an overhaul of the system since the spirit of the law has been diverted according to them.